When Reporting a Change in Accounting Principle, Required Disclosure(s) on the Income

question 52

Multiple Choice

When reporting a change in accounting principle, required disclosure(s) on the income statement include

• A) a per share amount for the cumulative effect of the change.
• B) the cumulative effect on prior years, net of tax.
• C) the cumulative effect be disclosed immediately after discontinued operations.
• D) a change in accounting principle is not reported on the income statement.

---

Definitions:

Invested Capital

The total amount of money that has been deployed in a company, including both debt and equity financing.

Return On Investment

A financial metric used to evaluate the efficiency or profitability of an investment, expressed as a ratio or percentage of the investment's net profit relative to its cost.

Economic Value Added

A measure of a company's financial performance that shows the net profit after deducting the cost of capital.

Imputed Interest Rate

An estimated interest rate used in accounting when no explicit interest is specified in a financial transaction, helping to assign a fair value to future payments.