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.

Analyze the impact of changes in COGS and other variables on net income and taxes.

Understand the calculation and implications of dividends, retained earnings, and their relation to net income.

Recognize the calculation and categories of current assets, including exceptions.

Differentiate among various income statement line items and their implications on business performance.

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Definitions:

Sample Proportion

An estimate of the proportion within the entire population that possesses a particular attribute, derived from a subset of the population.

Manufacturing Process

The procedure through which raw materials are transformed into finished products through various mechanical, chemical, or physical operations.

Upper Control Limit

The highest value on a control chart that signals the process is still in control or within predetermined bounds.

Sample Proportion

The fraction or percentage of items in a sample that are part of a particular category, representing a snapshot of that category in the larger population.