Stone Company Changed Its Method of Pricing Inventories from FIFO

question 91

Multiple Choice

Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?

• A) A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
• B) A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be presented as previously reported.
• C) A change in accounting estimate for which the financial statements for prior periods included for comparative purposes should be restated.
• D) A change in accounting principle for which the financial statements for prior periods included for comparative purposes should be restated.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quantity Supplied

The total amount of a good or service that producers are willing and able to sell at a given price within a specific time period.

Equilibrium Prices

The market price at which the quantity of goods supplied is equal to the quantity of goods demanded, leading to a stable market condition where there is no tendency for change.

Seating Capacity

The number of people who can be accommodated in a space, such as a vehicle, room, or venue, based on the available seats.