Yofile53

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  1. Which of the following changes would not be accounted for using the prospective approach? (Points : 8)
    A change to LIFO from average costing for inventories
    A change from the individual application of the LCM rule to aggregate approach
    A change from straight-line to double-declining balance depreciation
    A change from double-declining balance to straight-line depreciation
    2. When the retrospective approach is used for a change to the FIFO method, which of the following accounts is usually not adjusted? (Points : 8)
    Deferred Income Taxes
    Inventory
    Retained Earnings
    All of the above usually are adjusted
    3. If a change is made from straight-line to SYD depreciation, one should record the effects by a journal entry including (Points : 8)
    a credit to deferred tax liability.
    a credit to accumulated depreciation.
    a debit to depreciation expense.
    No journal entry is required.
    4. A change that uses the prospective approach is accounted for by (Points : 8)
    implementing it in the current year.
    reporting pro forma data.
    retrospective restatement of all prior financial statements in a comparative annual report.
    giving current recognition of the past effect of the change.
    5. Prior years’ financial statements are restated under the (Points : 8)
    current approach.
    prospective approach.
    retrospective approach.