Revised Estimates of the Useful Life or Residual Value of a Depreciable

question 141

True/False

Revised estimates of the useful life or residual value of a depreciable asset are examples of a change in accounting principle.

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Definitions:

Operating Cycle

The time period it takes for a company to purchase inventory, sell products, and convert sales into cash.

Current Assets

Assets that a company expects to convert into cash, sell, or consume within one year or the operating cycle, whichever is longer.

Net Income

Calculated as revenue minus the cost of goods sold, operating expenses, and taxes, representing the company's earnings.

Deferred Charges

Costs or expenses that are incurred in one period but are not reported until a future period on the income statement.