A company is justified in changing from one generally accepted accounting principle to another generally accepted accounting principle only if
A)the change decreases the entity's reported net income
B)the change both improves the financial statement presentation and increases the entity's reported net income
C)the change produces more informative financial statements
D)approval is first obtained from the Financial Accounting Standards Board

Question

Quizplus · Accepted Answer

A company can change from one generally accepted accounting principle to another generally accepted accounting principle only if the change produces more informative financial statements, meaning it improves the quality and relevance of information presented to users of financial statements. The change should not be made solely to increase net income or to improve the financial statement presentation without increasing the information content. There is no requirement for approval from the Financial Accounting Standards Board to change accounting principles.

A Company Is Justified in Changing from One Generally Accepted