Which of the Following Should NOT Be Reported Retroactively

question 24

Multiple Choice

Which of the following should NOT be reported retroactively?

• A) Use of an unacceptable accounting principle,then changing to an acceptable accounting principle
• B) Correction of an overstatement of ending inventory made two years ago
• C) Use of an unrealistic accounting estimate,then changing to a realistic estimate
• D) Change from a good faith but erroneous estimate to a new estimate

---

Definitions:

Standard Costs

Predetermined costs of manufacturing, overhead, material, and labor that are used as benchmarks to measure performance against actual costs.

Clerical Costs

Expenses associated with administrative tasks and office support activities within an organization.

Predetermined Overhead Rate

A rate based on the relationship between estimated annual overhead costs and expected annual operating activity, expressed in terms of a common activity base.

Direct Labor Hours

The total hours worked by employees directly involved in the production of goods or services, used for cost allocation and operational planning.