Generally accepted methods of accounting for a change in accounting principle include restating prior years' financial statements presented for comparative purposes. making a prior period adjustment. prospective changes. including the cumulative effect of the change in current period net income.

Generally accepted methods of accounting for a change in accounting principle include restating prior years' financial statements presented for comparative purposes. making a prior period adjustment. prospective changes. including the cumulative effect of the change in current period net income.

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter22: Accounting For Changes And Errors.

Section: Chapter Questions

Problem 1MC: The cumulative effect of an accounting change should generally be reported as an adjustment to the...

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Question

Generally accepted methods of accounting for a change in accounting principle include

restating prior years' financial statements presented for comparative purposes.

making a prior period adjustment.

prospective changes.

including the cumulative effect of the change in current period net income.

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The cumulative effect of an accounting change should generally be reported as an adjustment to the beginning balance of retained earnings in tin period in which the change is made for a:
Generally accepted methods of accounting for a change in accounting principle include O ncluding the cumulative effect of the change in current period net income. restating prior years' financial statements presented for comparative purposes. O making a prior period adjustment. O prospective changes.
A change in accounting policy requires what kind of adjustment to thefinancial statements? A. Current period adjustmentB. Prospective adjustmentC. Retrospective adjustmentD. Current and prospective adjustment
Using IFRS, how should prior period errors that are discovered in a subsequent reporting period be recognized in the financial statements? a. As an adjustment to beginning retained earnings for the reporting period in which the error was discovered. b. As a note in the financial statements that the error was previously made but has since been corrected. c. In the current period if it’s not considered practicable to report it retrospectively. d. In the statement of comprehensive income.
If it is impracticable to determine the cumulative effect of an accounting change to any of the prior periods, the accounting change should be accounted for a. as a cumulative effect change on the income statement b. as a prior period adjustment c. on a prospective basis d. as an adjustment to retained earnings
Retrospective changes require all but which of the following? Group of answer choices adjustments to assets and liabilities to reflect the cumulative effect of the change on periods prior to those presented restatement of financial statements to reflect the effects of the change for each period presented detailed numerical comparisons of all prior periods to restated statements retained earnings restated for the cumulative effect of the change on income for periods prior to those presented
The effect of a revision of an accounting estimate must be recognised in profit and loss in which reporting periods? In the present, prior (by adjusting retained earnings) and future periods affected. In the present and future periods affected. In the present and prior reporting periods (by adjusting retained earnings). Not recognised in any period.
A change in accounting policy requires that the cumulative effect of change for prior periods should be reported as an adjustment to: a. Beginning retained earnings for the earliest period presented b. Net income for the period in which the change occurred c. Comprehensive income for the earliest period presented d. Shareholders’ equity for the period in which the change occurred
Which of the following is (are) the proper time period(s) to record the effects of a change in accounting estimate? Current period and prospectively O Current period and retrospectively O Retrospectively only O Current period only
A prior period adjustment relates to the income of pastaccounting periods. Explain how such an item is shown inthe financial statements.
The change in accounting estimate should be treated currently and prospectively. True or false
Where financial statements for a single year are being presented, a prior period error recognized in the current year ordinarily would a. Affect net income of the current year. b. Be shown as an adjustment of the affected component of equity at the start of the current year. c. Be included in the statement of recognized gains and losses. d. Be shown as an extraordinary item on the current year's financial statement of comprehensive income.