GAAP States That a Change in Accounting Principle Includes

question 19

Multiple Choice

GAAP states that a change in accounting principle includes

• A) a change from one GAAP to another GAAP
• B) a change in accounting principle because the principle formerly used is no longer generally accepted
• C) a change in the method of applying an accounting principle
• D) All of these choices

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Definitions:

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates higher than market volatility, while a beta less than 1 indicates lower.

Required Rate of Return

A rephrasing of Required Return; the minimum annual percentage earned by an investment that will entice an individual or company to invest money.

Expected Growth Rate

The projected annual rate at which an investment or business is expected to grow.

Equilibrium

A state in which market supply and demand balance each other, resulting in stable prices.