Which of the Following Is Not Correct Regarding a Change

question 6

Multiple Choice

Which of the following is not correct regarding a change in reporting entity?

• A) Financial statements of the year in which the change in reporting entity is made should disclose the nature of the change and the reason for the change.
• B) The effect of the change on income before extraordinary items, net income, and earnings per share amounts should be reported for all periods presented.
• C) Financial statements presented for all prior periods must be restated.
• D) The effect of the change on income before extraordinary items, net income, and earnings per share amounts should be reported for all periods presented and must be repeated in all periods subsequent to the period of the change.

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Definitions:

Purchase of Raw Materials

The acquisition of the basic materials required for the production of goods or delivery of services.

Work in Process Inventory

The account that tracks the costs associated with partially completed goods that are still in the process of being manufactured.

Unadjusted Cost of Goods Sold

Unadjusted Cost of Goods Sold (COGS) is the initial calculation of all costs directly associated with the production of goods before any adjustments for inventory changes or other factors.

Journal Entry

A record in the accounting journal that represents a business transaction and its effect on the accounts.