When the Retrospective Approach Is Used for a Change to the FIFO

question 94

Multiple Choice

When the retrospective approach is used for a change to the FIFO method,which of the following accounts is usually not adjusted?

• A)Deferred Income Taxes.
• B)Inventory.
• C)Retained Earnings.
• D)All of these answer choices are usually are adjusted.

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Definitions:

Semistrong Efficiency

A form of market efficiency that asserts all public information is reflected in stock prices, alongside past trading information.

Market Anomalies

Price patterns or other market behaviors that deviate from the efficient market hypothesis and could potentially be exploited for profit.

Abnormal Returns

The earnings on a stock (or portfolio) that exceed what would be predicted by an equilibrium model like the CAPM.

Inside Trades

Trading activities based on material, non-public information about a company, which is illegal in many jurisdictions.