Which of the Following Statements Is True with Respect to a Financial

question 111

Multiple Choice

Which of the following statements is true with respect to a financial statement reporting a change in accounting principle?

• A)Comparability across periods is impaired.
• B)Only a footnote is required to report the change.
• C)Changes in both depreciation methods and inventory methods are reported retroactively.
• D)Management must show that the new accounting principle is preferable to the old method.

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Definitions:

Denominator Activity

A term used in cost accounting to refer to the level of activity used to allocate fixed costs to cost units.

Variable Overhead Efficiency Variance

The difference between the actual variable overhead based on hours worked and the standard cost of variable overhead for those hours, indicating efficiency in controlling variable overhead costs.

Variable Manufacturing Overhead Cost

The portion of manufacturing costs that varies with the level of production output, including costs such as indirect materials and utilities.

Standard Hours Allowed

The amount of time that should be taken to complete a specific amount of work, according to predefined standards.