A change from one acceptable accounting method to another is reported
A) on the statement of stockholders' equity, as a correction to the beginning balance
B) on the income statement, below income from continuing operations
C) on the income statement, above income tax expense
D) through a retroactive restatement of prior-period earnings

Question

Quizplus · Accepted Answer

A change from one accounting method to another is reported through a retroactive restatement of prior-period earnings. This means that the financial statements from previous years are restated to reflect the new accounting method, so that investors can compare the results of the company's operations more accurately over time. The income statement will reflect the impact of the accounting change on prior-period earnings, which will affect income tax expense and net income for the current period. This is typically disclosed in a footnote to the financial statements.

A Change from One Acceptable Accounting Method to Another Is