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

question 8

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

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Definitions:

Statement Of Retained Earnings

This is a financial statement that outlines the changes in retained earnings for a specific period, factoring in net income and dividends.

Income Statement

A financial statement that shows a company's revenues and expenses over a particular period, culminating in its net income or loss.

Cumulative

Referring to something that increases or accumulates over time, such as cumulative voting rights or cumulative dividends.

Stated Value

A value assigned to no-par value stock by the issuing company's board of directors to serve as the stock's legal capital.