When a Company Makes a Change in an Estimate That

question 42

Multiple Choice

When a company makes a change in an estimate that it has used in its financial statements,it should account for the change by:

• A) retroactively restating all prior financial statements
• B) treat the change as a cumulative effect change in accounting estimate
• C) spread the effect of the change over the current and future periods
• D) companies are not allowed to make changes to estimates

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Definitions:

Sociability Continuum

A range or spectrum measuring an individual's willingness or ability to engage and interact socially with others.

Excess Zone

An area or aspect in which there is more than what is necessary or appropriate.

Flexibility Zone

An area or range within which adaptability and willingness to change are practiced and encouraged.

Supportive Communication

Communication that seeks to preserve a positive relationship between communicators while addressing a problem, focusing on empathy and understanding.