A change that occurs as the result of new information or as additional experience is acquired is a
C. change in accounting estimate
All of the following are examples of a change in accounting principle except a change from
A. expensing certain expenditures that were immaterial to deferring and amortizing them because they have become material
A switch from the cash basis of accounting to the accrual basis is considered a
C. correction of an error
Changes in accounting principle are generally accounting for
The cumulative effect of a change in accounting principle is reported
A. on the retained earnings statement as an adjustment to the beginning balance on the earliest year presented
All of the following situations require the restatement of prior period financial statements except a change
B. to the LIFO inventory method from another method
Corrections of errors from prior periods are reported
A. as an adjustment to the current year's beginning retained earnings
The cumulative effect of an accounting change is not computed for a change
B. to the LIFO method from the FIFO method
Changes in estimates must be accounted for
Which of the following statements related to changes in estimates is not correct?
B. pro forma amounts for prior periods are reported
A change in reporting entity is accounted for
All of the following are examples of accounting errors except a
B. all of the options are accounting errors
Corrections of error must be accounted for
C. as prior period adjustments
Which of the following is not a reason why companies prefer certain accounting methods?
C. asset structure
All of the following involve counterbalancing errors except the
B. failure to record depreciation
Accounting changes are often made and the monetary impact is reflected in the financial statements of a company even though, in theory, this may be a violation of the accounting concept of
Which of the following is not treated as a change in accounting principle?
A. a change to a different method of depreciation for plant assets
Which of the following is not a retrospective type accounting change?
A. sum of the years digits method to the straight line method
Which of he following is accounted for as a change in accounting principle?
B. a change in inventory valuation from average cost to FIFO
Which of the following disclosures is required for a change from sum of years digits to straight line?
C. re-computation of current and future years' depreciation
A company changes from percentage of completion to completed contract, which is the method used for tax purposes. The entry to record this change should include a
B. debit to Retained Earnings in the amount of the difference on prior years, net of tax
Which of te following disclosures is required for a change from LIFO to FIFO?
B. all of these are required
Stone Company changed its method of pricing inventories from FIFO to LIFO. What type of accounting change does this represent?
C. a change in accounting principle for which the financial statements
for prior periods included for comparative purposes should be presented
as previously reported
Which type of accounting change should always be accounted for in current and future periods?
D. change in accounting estimate
Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate?
B. current period and prospectively
When a company decides to switch from the double-declining balance method to the straight line method, this change should be handled as a
D. change in accounting estimate
The estimated life of a building that has been depreciated 30 years of an originally estimated life of 50 years has been revised to a remaining life of 10 years. Based on this information, the accountant should
B. depreciate the remaining book value over the remaining life of the asset
Which of the following statements is correct?
A. a change from expensing certain costs to capitalizing these costs due
to a change in the period benefited, should be handled as a change in
Which of the following describes a change in reporting entity?
C. changing the companies included in combined financial statements
An example of a correction of an error in previously issued financial statements is a change
C. from the cash basis of accounting to the accrual basis of accounting