The advantage of the retrospective approach to accounting for changes in accounting principle is that the financial statements in the year of the change and for prior years presented for comparative purposes are prepared on the same basis of accounting.

Question

Quizplus · Accepted Answer

The retrospective approach requires restating prior year financial statements on the same basis as the new accounting principle, which allows for consistency in presentation and comparability between years.

The Advantage of the Retrospective Approach to Accounting for Changes