Which of the following would be considered a change that affects comparability and requires an explanatory paragraph?
A)Change in accounting estimate.
B)Change in accounting principle.
C)Change in classification from one acceptable classification to another.
D)All of the other options are correct.

Question

Quizplus · Accepted Answer

A change in accounting principle results in a change in the way an item is recognized, measured or presented in the financial statements. This affects comparability with prior periods and hence requires an explanatory paragraph in the financial statements. A change in accounting estimate or classification may also affect comparability, but these changes may not necessarily require an explanatory paragraph, depending on the materiality of the change and the context in which it occurs. Therefore, option D is incorrect. Option C may be incorrect, as a change in classification may or may not affect comparability, depending on the circumstances.

Which of the Following Would Be Considered a Change That