All of the Following Statements Regarding Changes in Accounting Principles

question 38

Multiple Choice

All of the following statements regarding changes in accounting principles are true except:

• A)Most changes in accounting principles are only reported in current periods when the principle change takes place.
• B)Changes in accounting principles are allowed when new principles are preferable to old ones.
• C)Most changes in accounting principles are retroactively reported.
• D)Consistency is one of the biggest concerns when a change in accounting principle is undertaken.

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Definitions:

Ordinary Maintenance

Routine maintenance and repairs necessary to keep an asset in working condition, not significantly prolonging its life or increasing its value.

Replacing Engine

The process of removing a damaged or nonfunctional engine from a vehicle or machine and installing a new or refurbished one.

Depreciation Expense

The allocation of the cost of a tangible asset over its useful life, reflecting the asset's consumption, wear, and tear or obsolescence.

Fixed Assets

Tangible assets purchased for long-term use and not likely sold in the normal course of business, such as buildings, machinery, and equipment.