A Company Has Changed Its Method of Inventory Valuation from an Unacceptable

question 1

Multiple Choice

A company has changed its method of inventory valuation from an unacceptable one to one in conformity with generally accepted accounting principles. The auditor's report on the financial statements of the year of the change should include

• A) no reference to consistency.
• B) a reference to a prior period adjustment in the opinion paragraph.
• C) an explanatory paragraph that justifies the change and explains the impact of the change on reported net income.
• D) an explanatory paragraph explaining the change.

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Definitions:

Local Districts

Geographic or administrative divisions within a larger region or country, often used for local governance or electoral purposes.

Pork-barrel Legislation

Government spending for localized projects secured primarily to bring money to a representative's district.

Government Decisions

Actions or policies made by the governing authorities that influence various aspects of society and the economy.

Concentrated Benefits

Advantages or gains that are narrowly distributed among a small group rather than being widely shared across the general population.