Prior Period Adjustments to Financial Statements Can Result From

question 77

Multiple Choice

Prior period adjustments to financial statements can result from:

• A)Changes in accounting estimates.
• B)Unacceptable accounting practices.
• C)Discontinued operations.
• D)Changes in tax law.
• E)Extraordinary items.

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Definitions:

Return on Investment

A measure of the profitability or efficiency of an investment, calculated as the net profit from the investment divided by its cost.

Residual Income

Operating income that exceeds a set minimum return on operating assets, used as a measure of the profitability and performance of a business unit.

Division

A segment within an organization that focuses on specific products, services, territories, or customers, usually with its own set of management and financial goals.

Division's Margin

The profit margin measured at the divisional level, reflecting the division's ability to generate profit from its revenues.