Which of the Following Statements Is True with Respect to Financial

question 98

Multiple Choice

Which of the following statements is true with respect to financial statement reporting for all cases when a company changes from one acceptable accounting method to another?

• 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 indicate that the accounting method change is preferable to the old method.

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Definitions:

Project Profitability Index

A financial metric used to evaluate the desirability of an investment or project, calculated by dividing the present value of future cash flows by the initial investment cost.

Internal Rate Of Return

The discount rate at which the net present value of an investment project is zero; the rate of return of a project over its useful life.

Preference Ranking

A system or method used to arrange or prioritize options based on their desirability or value from a subjective viewpoint.

Investment Projects

Initiatives undertaken by businesses or individuals to allocate resources, often capital, with the expectation of generating future returns.