How Should a Change from One Generally Accepted Accounting Principle

question 42

Multiple Choice

How should a change from one generally accepted accounting principle to another accepted principle be handled in a third-quarter income statement?

• A) Retrospectively restate the first-quarter income statement, net of income taxes, as though the change occurred at the beginning of the year.
• B) Postpone recording of the change to the annual income statement.
• C) Record the change in the third-quarter income statement, net of income taxes.
• D) Adjust financial statements for each prior period presented to reflect the effects of the new principle in those reported periods.
• E) These changes are prohibited by GAAP.

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Definitions:

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A period after the Civil War when Presidents Lincoln and Johnson proposed plans to reunify the nation that were lenient towards the southern states.

Moderate Republicans

Members of the Republican Party in the United States who hold centrist views and often seek compromise with political opponents.

Radical Republicans

A faction within the Republican Party in the United States during the Civil War and Reconstruction eras, advocating for the abolition of slavery, citizenship, and voting rights for African Americans.

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The extensive damage and destruction caused to infrastructure, population, and the environment during and after armed conflicts.