Which of the Following Statements Is Correct

question 50

Multiple Choice

Which of the following statements is correct?

• A) A change in estimated useful life for a building should cause a correction to prior years' retained earnings.
• B) A change in method of accounting for depreciation should cause an adjustment to current year's depreciation expense and a cumulative effect for the effect of the change on prior year's earnings.
• C) An error affecting prior year's depreciation is treated as a change in estimate.
• D) A cumulative effect will never be accompanied by a related tax effect

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Definitions:

Type A Misfires

Refers to engine misfires that are consistent and can often be traced back to a specific cylinder or cause, such as fuel, ignition, or mechanical issues.

Type B Misfires

Misfires in an engine that happen under specific conditions or times, potentially indicating a sporadic or intermittent problem.

Emissions-Threatening

Pertaining to substances or activities that pose a risk to air quality by releasing harmful pollutants.

Catalyst-Damaging

Pertaining to substances or conditions that can degrade or impair the function of a catalytic converter, which is an emissions control device in vehicles.