A company can change to a new accounting principle if management can justify that the change will result in
A)less likelihood of clerical errors.
B)higher profit.
C)lower profit for tax purposes.
D)more relevant information for decision-making.

Question

Quizplus · Accepted Answer

A company can change to a new accounting principle if management can justify that the change will result in more relevant information for decision-making. This is because the accounting principles used by a company affect the quality and usefulness of financial information for decision-making purposes. A change in accounting principle should result in more relevant and reliable information, even if it leads to lower reported profits or other financial metrics in the short term.

A Company Can Change to a New Accounting Principle If