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.

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Definitions:

Predictable Variability

Variations in demand, supply, or processes that can be anticipated and planned for based on historical data or trends.

Profitability

The financial metric used to assess the ability of a business to generate earnings compared to its expenses and other relevant costs.

Seasonal Workforce

Employment that changes with the seasons, often increasing during peak production times and decreasing in off-peak seasons.

Peak Season

The time of year when demand for services or goods is highest, often leading to increased business activity.