A Change in Accounting Principle Requires That the Cumulative Effect

question 8

Multiple Choice

A change in accounting principle requires that the cumulative effect of the change for prior periods be shown as an adjustment to:

• A) Beginning retained earnings of the earliest period presented
• B) Comprehensive income for the earliest period presented
• C) Stockholders' equity of the period in which the change occurred
• D) Net income of the period in which the change occurred

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Definitions:

Tolerant Of Ambiguity

The capacity to remain comfortable and composed in situations that are unclear or uncertain.

Rigid Thinking

The inability to consider alternative viewpoints or adapt to new situations, often leading to ineffective problem-solving and decision-making.

Corporate Ladder

A metaphor for the hierarchical structure of a company, indicating the different levels of responsibility and rank.

Emotional Intelligence

denotes the ability to recognize, understand, manage, and reason with emotions in oneself and others, facilitating enhanced interpersonal communication and decision-making.