A Change in Accounting Policy from the Revaluation Model to the Cost

question 1

Multiple Choice

A change in accounting policy from the revaluation model to the cost model requires a retrospective adjustment to the:

• A)revenue in the profit and loss statement
• B)expenses in the profit and loss statement
• C)opening balance of retained earnings
• D)other comprehensive income.

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Definitions:

Journal Entry

A record of financial transactions in the accounting books of a business, showing the accounts affected and the amounts of debits and credits.

Purchase on Account

A transaction in which a buyer acquires goods or services with an agreement to pay the supplier at a later date, typically billed through an invoice.

Payment of Invoice

A financial transaction that involves the settlement of a bill for goods or services provided.

Supplies

Items used in the day-to-day operations of a business, such as office supplies, which may be consumable or expendable.