Which of the following statements concerning a change in accounting policy is true?
A) If a change in accounting policy is adopted retroactively, the company needs to restate closing retained earnings.
B) If a change in accounting policy is adopted retroactively, the company needs to restate opening retained earnings.
C) If a change in accounting policy is adopted prospectively, the company needs to restate closing retained earnings.
D) If a change in accounting policy is adopted prospectively, the company needs to restate opening retained earnings.

Question

Quizplus · Accepted Answer

When a change in accounting policy is adopted retroactively, it requires the restatement of prior period financial statements as if the new policy had always been in place. This involves adjusting the opening balances of assets, liabilities, and equity for the earliest period presented, which includes restating opening retained earnings to reflect the cumulative effect of the change on prior periods.

Which of the Following Statements Concerning a Change in Accounting