Which of the Following Is a Change in Accounting Principle

question 94

Multiple Choice

Which of the following is a change in accounting principle?

• A) a change in the estimated service life of machinery
• B) a change from FIFO to weighted average for inventory costing
• C) a change in the estimated allowance for bad debts
• D) a change in estimated future warranty expense

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value; often reflects the risk-free interest rate.

Discount Rate

The discount rate is the interest rate set by central banks charged to commercial banks for loans, affecting the cost of borrowing money.

Actual Interest Rate

The real rate of interest earned or paid on an investment or loan, taking into account the effect of compounding.

Cash Discounts

Reductions in price given to a customer for prompt payment of their bill.