If practical, firms account for voluntary changes in accounting principles, such as from a LIFO to a FIFO cost-flow assumption for inventories, by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings of the current period.

Question

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Firms generally do account for voluntary changes in accounting principles by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings.

If Practical, Firms Account for Voluntary Changes in Accounting Principles