Under new accounting standards passed in 2006 firms must report changes in accounting principle in the current and prior years as if the new accounting principle had been applied all along.The rationale for this change was:
A) using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings.
B) conservatism.
C) comparability.
D) materiality.

Question

Quizplus · Accepted Answer

The rationale for this change was using the same accounting principle in current and prior periods enhances the information content of reported earnings in forecasting future earnings. This means that users of financial statements can more easily compare the financial results of different periods and make informed decisions.

Under New Accounting Standards Passed in 2006 Firms Must Report