A Company Changed Its Method of Inventory Pricing from Last-In

question 6

Multiple Choice

A company changed its method of inventory pricing from last-in, first-out to first-in, first-out during the current year. Generally accepting accounting principles require that this change in accounting method be reported by:

• A) Accounting for the effects of the change in the current and future periods.
• B) Showing the cumulative effect of the change in the current year's financial statements and pro forma effects on prior year's financial statements in an appropriate footnote
• C) Disclosing the reason for the change in the "significant accounting policies" footnote for the current year but not restating prior year financial statements
• D) Applying retroactively the new method in restatements of prior years and appropriate footnote disclosures

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Definitions:

Breaches

Instances where parties fail to fulfill their obligations or violate the terms of a contract or agreement.

Duty

A moral or legal obligation to perform or refrain from performing a certain action.

Rescind

To revoke, cancel, or repeal a contract, agreement, or law, making it as though it never existed.

Tenant

An individual or entity that occupies property or land rented from a landlord or owner.