When Reporting a Change in an Accounting Principle,the General Rule

question 97

Multiple Choice

When reporting a change in an accounting principle,the general rule requires that the current year's income from continuing operations reflect

• A)use of the newly adopted principle for the current year recognition.
• B)use of the old principle for the current year recognition.
• C)management's choice of either the old or newly adopted principle for the current year recognition.
• D)FASB's designation of either the old or newly-adopted principle based on the item being changeD.

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Definitions:

Payback Period

An alternative metric to calculate the duration required for an investment to recoup its initial costs, measuring the risk and efficiency of the investment.

Initial Cost

The initial expenditure required to acquire an asset or to start a project, including purchase price and any associated set-up fees.

Investment

Allocation of resources, usually money, in order to generate income or profit.

Cash Flows

The total amount of money being transferred into and out of a business, especially regarding liquidity.