A company can change to a new accounting principle if management can justify that the new principle results in
A) more relevant and faithful representation of the financial presentation in the statements.
B) a higher profit.
C) a lower profit for tax purposes.
D) less likelihood of clerical errors.

Question

Quizplus · Accepted Answer

The correct choice is A because changing to a new accounting principle is justified if it results in a more relevant and faithful representation of the financial presentation in the statements, according to accounting standards and principles. This ensures the financial statements provide a true and fair view of the company's financial position and performance. Choices B, C, and D are not valid justifications for changing accounting principles under generally accepted accounting principles (GAAP) or International Financial Reporting Standards (IFRS).

A Company Can Change to a New Accounting Principle If