The Cumulative Effect on Prior Years' Earnings of a Change

question 30

Multiple Choice

The cumulative effect on prior years' earnings of a change in accounting principle should be reported separately as an adjustment to retained earnings for the earliest period presented for all of the following changes except

• A) completed-contract method of accounting for long-term construction-type contracts to the percentage-of-completion method.
• B) percentage-of-completion method of accounting for long-term construction-type contracts to the completed-contract method.
• C) FIFO method of inventory pricing to LIFO method.
• D) LIFO method of inventory pricing to the weighted-average method.

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Definitions:

Transaction Costs

Expenses incurred when buying or selling goods and services, which can include broker fees, communication charges, or the cost of obtaining information.

Classified Ads

Short advertisements placed by individuals or businesses in a categorised listing to sell products or services, typically found in newspapers and online platforms.

Professors' Salaries

The remuneration paid to academic teaching staff, which may vary based on rank, experience, and the type of institution.

Price Ceiling

A legal maximum price that can be charged for a good or service.