An Example of a Correction of an Error in Previously

question 38

Multiple Choice

An example of a correction of an error in previously issued financial statements is a change

• A) from the FIFO method of inventory valuation to the average cost method.
• B) in the service life of plant assets, based on changes in the economic environment.
• C) from the cash basis of accounting to the accrual basis of accounting.
• D) in the tax assessment related to a prior period.

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Definitions:

Tectonic Plates

The dozen or so fairly rigid blocks into which Earth’s lithosphere is broken.

Earthquake Risk

The probability or likelihood of experiencing earthquakes in a given area, often associated with fault lines or tectonic plate boundaries.

High Risk Areas

Locations identified as having a significant probability of experiencing hazardous events, such as natural disasters or environmental threats.

Seismic Waves

Vibrations that travel through Earth's layers, caused by natural processes like earthquakes or artificial events such as explosions.