Changes in Accounting Principles

question 86

Multiple Choice

Changes in accounting principles:

• A)are reported for the current and future periods on the new basis.
• B)require the company to retrospectively restate all prior-period amounts presented for comparative purposes.
• C)are not allowed under GAAP.
• D)are shown on the balance sheet.

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Definitions:

Profit

The financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

Transfer Price

The price at which goods or services are sold between divisions within the same company or between companies under common control.

Variable

A quantity or factor in an experiment or equation that can change or be changed.

Variable Production Cost

Costs that vary directly with the level of production output, including raw materials, direct labor, and other expenses that increase with production volume.