How Would a Company Report a Change in an Accounting

question 7

Multiple Choice

How would a company report a change in an accounting principle made on the last day of the third quarter?

• A)Retrospective application to all pre-change interim periods reported.
• B)No change is required.
• C)Apply to current and prospective interim periods only.
• D)Apply to prospective interim periods only.

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Definitions:

Cash Disbursements

Money being paid out by a company during a period, including expenses, debt payments, and purchase of assets, usually tracked through a cash disbursements journal.

Materials Purchases

The total cost of raw materials bought by a company for use in its manufacturing process during a specific period.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are an integral part of the finished product.

Production Budget

A financial plan that outlines the expected production levels of a company based on projected sales, inventory policies, and capacity constraints.