Which of the following best describes the treatment given a change in accounting principles made during the second quarter?
A)The cumulative effect should be recognized in the quarter in which the decision to change is made.
B)Regardless of the quarter of change, the recognition is deferred until year end.
C)All prior interim periods are retrospectively restated.
D)Interim periods prior to the period of change are not restated.

Question

Which of the following best describes the treatment given a change in accounting principles made during the second quarter?
A)​The cumulative effect should be recognized in the quarter in which the decision to change is made.
B)​Regardless of the quarter of change, the recognition is deferred until year end.
C)​All prior interim periods are retrospectively restated.
D)​Interim periods prior to the period of change are not restated.

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), when a company changes an accounting principle, all prior interim financial statements must be retrospectively restated. Therefore, answer choice C is the best description of the treatment given to a change in accounting principles during the second quarter. The cumulative effect of the change should be recognized in the quarter in which the decision to change is made and all prior periods should be restated to reflect this change. Answers A, B, and D are all incorrect because they do not reflect the requirement to retrospectively restate prior periods.

Which of the Following Best Describes the Treatment Given a Change