A Change in Accounting Policy Should Be Made Only

question 10

Multiple Choice

A change in accounting policy should be made only:

• A) If required by tax law.
• B) If the change will result in a more appropriate presentation of events or transactions in the financial statements of the entity.
• C) If it allows the entity to improve its income.
• D) All of these

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Definitions:

Cash Flows

The net amount of cash being transferred into and out of a business, indicating its liquidity level over a period.

Financing Activities

These are activities that result in changes in the size and composition of the equity capital or borrowings of the entity.

Schedule

A plan that lists events, activities, or tasks along with their intended or expected times and dates.

Investing Activities

Part of a company's cash flow statement that shows the amount of money spent or generated from various investment-related activities in a specific time period.