When an accounting change is reported under the retrospective approach, account balances in the general ledger:
A) Are not adjusted.
B) Are closed out and then updated.
C) Are adjusted net of the tax effect.
D) Are adjusted to what they would have been had the new method been used in previous years.

Question

Quizplus · Accepted Answer

Under the retrospective approach, account balances in the general ledger are adjusted to what they would have been had the new method been used in previous years. This requires restating prior period financial statements using the new accounting method.

When an Accounting Change Is Reported Under the Retrospective Approach