Multiple Choice Question:A change in accounting principle requireswhat?a) Only prospective applicationb) Retrospective applicationc) No disclosured) Only current year adjustment

Explanation of Accounting Principle Change: A change in accounting principle represents a switch…

Answered: Multiple Choice Question: A change in…

Financial Accounting: The Impact on Decision Makers

10th Edition

ISBN:9781305654174

Author:Gary A. Porter, Curtis L. Norton

Publisher:Gary A. Porter, Curtis L. Norton

Chapter4: Income Measurement And Accrual Accounting

Section: Chapter Questions

Problem 4.23E: The Effect of Ignoring Adjusting Entries on Net Income For each of the following independent...

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A change in accounting estimate is accounted for by Prospective application Retrospective application Retrospective restatement Any of the above
The Effect of Ignoring Adjusting Entries on Net Income For each of the following independent situations, determine whether the effect of ignoring the required adjusting entry will result in an understatement (U), will result in an overstatement (O), or will have no effect (NE) on net income for the period.
Problem: 4-13 A change in accounting estimate is applied? a) Retrospectively b) Prospectively C) Both prospectively and retrospectively d) Neither prospectively nor retrospectively
Generally accepted methods of accounting for a change in accounting principle include
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Retrospective restatement usually is appropriate for a change in: Accounting Estimate Accounting Principle a. Yes Yes b. Yes No c. No Yes d. No No Multiple Choice Option c Option b
Which of the following sets of conditions would give rise to the accrual of a contingency under current generally accepted accounting principles? Group of answer choices Amount of loss is reasonably estimable and event occurs infrequently. Amount of loss is reasonably estimable and occurrence of event is probable. Event is unusual in nature and occurrence of event is probable. Event is unusual in nature and event occurs infrequently.
Current Attempt in Progress Which of the following disclosures is not required for a change from LIFO to FIFO? O indirect effect impact related to the change in accounting principle O the cumulative effect on prior years, net of tax, in the current retained earnings statement O restated prior year income statements O the justification for the change
Accounting treatment for changes in accounting principle are best described as: Multiple Choice Chose one of anwers Changes in accounting principle that are only permitted when FASB issues a standard that revises GAAP. Changes in accounting principle that are always accounted for using the retrospective approach which requires only a restatement of prior years’ presented financial information. Changes in accounting principle that may require both a restatement of prior years’ financial information and the recording of a cumulative adjustment to retained earnings. Tax effects are ignored when reporting changes in accounting principles.
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When the FASB issues a new generally accepted accounting principle, it may require companies to apply the new principle prospectively, or to account for the change by the retrospective adjustment method. Required: Why do you think that the FASB requires one of two different transition methods when a company adopts a newly required accounting principle? Do you agree with the use of two alternative methods?

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Multiple Choice Question: A change in accounting principle requires what? a) Only prospective application b) Retrospective application c) No disclosure d) Only current year adjustment