When an Entity Changes Its Accounting from One Generally Accepted

question 18

Multiple Choice

When an entity changes its accounting from one generally accepted method to another generally accepted method:

• A) financial statements of all prior years are changed to maintain comparability.
• B) an explanatory note stating that the change was approved by the Financial Accounting Standards Board is required.
• C) the dollar effect of the change on both the balance sheet and income statement must be disclosed.
• D)changes like this are not permitted.

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Definitions:

Idle Time

The time period in which resources, such as machines or employees, are available but not in use or production.

Production Lead Time

The total time required to manufacture an item, including the wait, preparation, and processing times, from the beginning of production to the product’s completion.

Idle Time

The time period during which production resources are not being used effectively due to factors like machine breakdowns, inefficient scheduling, or lack of orders.

Production Process

The production process involves the steps, operations, and methods used to transform raw materials into finished products, encompassing both manufacturing and service delivery.