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:

Two-factor Theory

A psychological model proposing that human emotions are composed of two factors: physiological arousal and cognitive interpretation of that arousal.

Physiological Responses

Automatic reactions of the body to internal or external stimuli, such as changes in heart rate or hormone levels.

Two-factor Theory

A psychological theory that asserts that human emotions are derived from a combination of physiological arousal and cognitive label.

Stanley Schachter

An American psychologist known for his development of the Two Factor Theory of Emotion, which suggests that emotions are determined by physiological arousal and cognitive labeling.