The Bronson Company changed its method of determining inventories from LIFO to FIFO. This change represents a
A) change in accounting estimate that should be treated prospectively.
B) change in accounting principle that should be treated prospectively.
C) change in accounting estimate for which the financial results of previous years are restated.
D) change in accounting principle for which the financial statements of prior periods included for comparative purposes are restated.

Question

Quizplus · Accepted Answer

Changing from LIFO (Last In, First Out) to FIFO (First In, First Out) is considered a change in accounting principle. According to generally accepted accounting principles (GAAP), when a company changes its accounting principle, it should restate the financial statements of prior periods included for comparative purposes to reflect the application of the new principle as if it had always been used. This ensures consistency and comparability across periods.

The Bronson Company Changed Its Method of Determining Inventories from LIFO