Asked by jasmine badayos on May 26, 2024
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A cumulative effect of a change in an accounting principle is measured as
A) the difference between prior periods' net income under the old method and what would have been reported if the new method had been used in the prior years.
B) the after-tax difference between prior periods' net income under the old method and what would have been reported if the new method had been used in the prior years.
C) the difference between prior periods' net income and current net income under the old method and what would have been reported if the new method had been used in the prior years and the current year.
D) the after-tax difference between prior periods' net income and current net income under the old method and what would have been reported if the new method had been used in the prior years and the current year.
Cumulative Effect
The total impact of a change in accounting principle or correction of an error reported in a single period's financial statements.
Change In Accounting Principle
An adjustment made to the accounting methods used by a company, often requiring retrospective application to prior period financial statements.
Net Income
The remaining earnings of a firm once subtracting every expense and tax from its total income.
- Learn about the process of reporting adjustments in accounting principles and estimates and their repercussions on financial statements.
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Learning Objectives
- Learn about the process of reporting adjustments in accounting principles and estimates and their repercussions on financial statements.
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