Which of the Following Would Not Be Accounted for Using

question 88

Multiple Choice

Which of the following would not be accounted for using the prospective approach?

• A)A change to LIFO from FIFO for inventory costing.
• B)A change in price indexes used under the LIFO method of inventory costing.
• C)Amortization of the transition amount under SFAS 109.
• D)A change from the cash basis to accrual accounting.

Understand and apply the perpetual inventory system for recording transactions.

Calculate gross profit accurately.

Journalize purchasing and payment transactions, including the impact of discounts.

Understand and apply terms of sales, including FOB shipping point and FOB destination.

---

Definitions:

Equipment

Equipment consists of the tools, machinery, and other tangible assets used by a company in its operations.

Asset-Expense Relationship

The association between expenses incurred by a business and the assets used to generate revenue.

Prepaid Expense

An expense that has been paid in advance and is recognized as an asset until the service or good is consumed or used in the future.

Adjusting Entries

Entries recorded in journals at the conclusion of an accounting cycle to properly distribute revenues and expenses to the corresponding period.