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Kitty [74]
3 years ago
10

What should occur when there is a change in accounting principle? A : The new principle should be used in reporting the results

of operations of the current year, but there is no change to prior years. B : The old principle should be used in reporting the results of operations for the current year. C : The change should be reported retroactively. D : The cumulative effect of the change should be reported in the current year's income statement.
Business
1 answer:
meriva3 years ago
6 0

Answer:

The correct answer is letter "C": The change should be reported retroactively.

Explanation:

Changes in Accounting Principles happen when a company switches between various generally accepted accounting principles or adjusts the process by which a rule is applied. Those changes can take place in accounting mechanisms for Generally Accepted Accounting Principles (<em>GAAP</em>) or International Financial Reporting Standards (<em>IFRS</em>).  

When the changes happen, companies must apply it <em>retrospectively </em>to all previous accounting periods, as if the norm would have been always there.

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