When a company changes from one acceptable accounting method to another, the change is reported
A) in the statement of retained earnings, as a correction to the beginning balance.
B) in the income statement, below income from continuing operations.
C) in the income statement, above income from continuing operations
D) through a retroactive restatement of prior period earnings.

Question

Quizplus · Accepted Answer

When a company changes from one acceptable accounting method to another, the change is reported through a retroactive restatement of prior period earnings. This means that the company will revise its financial statements for prior periods to reflect the new accounting method, including any adjustments to the opening balance of retained earnings. This is required by accounting standards to ensure consistent and comparable financial reporting. The revised financial statements are then presented alongside the current period's financial statements for comparison.

When a Company Changes from One Acceptable Accounting Method to Another