When a Company Makes a Change in an Estimate That

question 42

Multiple Choice

When a company makes a change in an estimate that it has used in its financial statements,it should account for the change by:

• A) retroactively restating all prior financial statements
• B) treat the change as a cumulative effect change in accounting estimate
• C) spread the effect of the change over the current and future periods
• D) companies are not allowed to make changes to estimates

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Definitions:

First Stage

The initial phase or period in a process, development, or series of events.

Uterine Contractions

The tightening and relaxing of the muscles in the uterus, which can occur during menstruation or childbirth.

Last Month

A reference to the previous calendar month from the current date.

Fetus

A developing mammal or human after the embryonic stage and before birth, characterized by rapid growth and the maturation of organ systems.