When a company changes an accounting principle, it should report the change by reporting the cumulative effect of the change in the current year's income statement.

Question

Quizplus · Accepted Answer

According to generally accepted accounting principles (GAAP), when a company changes an accounting principle, it should retrospectively apply the change to all prior periods presented in the financial statements, rather than reporting the cumulative effect of the change in the current year's income statement.

When a Company Changes an Accounting Principle, It Should Report