Which of the Following Is/are True About Accounting for Errors

question 203

Multiple Choice

Which of the following is/are true about accounting for errors and changes in accounting principles and changes in accounting estimates?

• A)Firms account for material errors in previously issued financial statements by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings of the current period.
• B)If practical, firms account for voluntary changes in accounting principles, such as from a LIFO to a FIFO cost-flow assumption for inventories, by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings of the current period.
• C)Firms account for changes in accounting principles required by a new reporting standard in accordance with the guidance specified in the standard.
• D)Firms account for changes in estimates, such as for depreciable lives, uncollectible accounts, or warranty cost, prospectively, in current and future periods' earnings.
• E)all of the above

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Definitions:

Eye Shields

Protective devices worn over the eyes to prevent injury or shield from bright light or harmful particles.

Phenylalanine Hydroxylase

An enzyme that converts the amino acid phenylalanine into tyrosine, its deficiency can lead to phenylketonuria.

PKU

Phenylketonuria, a genetic disorder characterized by the inability to break down the amino acid phenylalanine, leading to harmful levels in the body unless managed with a special diet.

Low-Phenylalanine

Pertaining to a diet low in phenylalanine, an essential amino acid, often prescribed for individuals with Phenylketonuria (PKU) to prevent brain damage.