Test Bank-2020-Financial Accounting-Meaning.Nature & Role-Chapter 20- Accounting Changes and Errors

. Most, but not all, changes in accounting principle are reported using the retrospective approach. True False 2. Prior years' financial statements are restated when the prospective approach is used. True False 3. The after-tax cumulative effect on income is no longer required for changes in accounting principles. True False 4. Most changes in accounting principle require a disclosure justifying the change in the first set of financial statements after the change is made. True False 5. All changes reported using the retrospective approach require prior period adjustments. True False 6. All changes in estimate are accounted for retrospectively. True False 7. A change to the LIFO method of valuing inventory usually requires use of the retrospective method. True False18. When a change in accounting principle is reported, what is sometimes sacrificed? A. Relevance. B. Consistency. C. Conservatism. D. Reliability.19. When an accounting change is reported under the retrospective approach, prior years' financial statements are: A. Revised to reflect the use of the new principle. B. Reported as previously prepared. C. Left unchanged. D. Adjusted using prior period adjustment procedures.20. Regardless of the type of accounting change that occurs, the most important responsibility is: A. To properly determine the tax effect. B. To communicate that a change has occurred. C. To compute the correct amount of the change. D. None of the above21. Which of the following changes would not be accounted for using the prospective approach? A. A change to LIFO from average costing for inventories. B. A change from the individual application of the LCM rule to aggregate approach. C. A change from straight-line to double-declining balance depreciation. D. A change from double-declining balance to straight-line depreciation.22. Accounting changes occur for which of the following reasons? A. Management is being fair and consistent in financial reporting. B. Management compensation is affected. C. Debt agreements are impacted. D. All of the above.