An Example of a Special Change in Accounting Principle That

question 41

Multiple Choice

An example of a special change in accounting principle that should be reported by restating the financial statements of prior periods is the change from the:

• A)FIFO method of inventory valuation to the Weighted Average method.
• B)Straight-line method of depreciating plant equipment to the sum-of-the-years'-digits method.
• C)Sum-of-the-years'-digits method of depreciating plant equipment to the straight-line method.
• D)All of these choices are correct.

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Definitions:

Merchandise

Goods purchased for resale to customers in the ordinary course of a business's operations.

Subsidiary Ledger

A subsidiary ledger is a detailed record that supports the entries recorded in a primary accounting ledger, often used for accounts like accounts payable and receivable.

General Ledger

A comprehensive record containing all financial transactions of a company, used to prepare financial statements.

Accounts Receivable

Money owed to a company by customers for products or services that have been delivered but not yet paid for.