All of the following statements regarding changes in accounting principle are true except
A) most changes in accounting principle are retroactively reported.
B) changes in accounting principle are allowed when new principles are preferable to old ones.
C) most changes in accounting principle are only reported in current periods when the principle change takes place.
D) consistency is one of the biggest concerns when a change in accounting principle is undertaken.

Question

Quizplus · Accepted Answer

This statement is false. While some changes in accounting principle are reported in current periods only, others may require a retrospective adjustment to previous periods to ensure consistency. The determination of whether or not retroactive reporting is necessary depends on the impact of the change on financial statements and the materiality of the adjustment.

All of the Following Statements Regarding Changes in Accounting Principle