A Change in Accounting Principle Requires That the Cumulative Effect

question 3

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) net income of the period in which the change occurred.
• C) comprehensive income for the earliest period presented.
• D) stockholders' equity of the period in which the change occurred.

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Definitions:

Electrons

Subatomic particles with a negative charge, orbiting the nucleus of an atom and involved in chemical bonds and electricity.

Oxidation

A chemical reaction involving the loss of electrons or an increase in oxidation state by a molecule, atom, or ion.

Lactose Intolerant

A condition where the body cannot easily digest lactose, a type of sugar found in milk and dairy products.

Lactase

An enzyme found in the small intestine necessary for the digestion of lactose, the sugar found in milk.