A change from one acceptable accounting method to another is reported a. on the income statement, below income from continuing operations b. through a retroactive restatement of prior period earnings c. on the income statement, above income tax expense d. on the statement of retained earnings, as a correction to the beginning balance

Question

Bucky

Business

5 February, 00:42

A change from one acceptable accounting method to another is reported a. on the income statement, below income from continuing operations b. through a retroactive restatement of prior period earnings c. on the income statement, above income tax expense d. on the statement of retained earnings, as a correction to the beginning balance

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Alvin Forbes · Answer 1

The correct answer is letter "B": through a retroactive restatement of prior period earnings.

Explanation:

Whenever a company decides to use a different accounting principle or method to record its transactions whether using the Generally Accepted Accounting Principles (GAAP) or the International Financial Reporting Standards (IFRS) the change must apply retroactively.

The books and all its ledgers must be portrayed in such a way as if the current method being used was always applied unless there are difficulties while doing so.