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:

Clean-Up Requirements

Environmental or legal directives that mandate the remediation of pollution or contaminants from a site.

Compensating Balance

A minimum account balance that a borrower is required to maintain with a lender, which can reduce the effective amount of loan available to the borrower.

Cash Balances

The total amount of cash in a company's account at any given time, which can be used for transactions or as a reserve.

Receivables Financing

A form of financing where a company uses its outstanding invoices or receivables as collateral to secure a loan or advance.