Intermediate Accounting Volume 2 Canadian 7th Edition By Beechy – Test Bank

MULTIPLE CHOICE.  Choose the one alternative that best completes the statement or answers the question.

• A change from inventory costing using FIFO to inventory costing using Weighted Average is an example of a change in accounting principle.
  1. True B) False

Answer: B

• Revised estimates of the useful life or residual value of a depreciable asset are examples of a change in accounting principle.
  1. True B) False

Answer: B

• A change, for depreciation purposes, of either estimated useful life or estimated residual value usually is referred to as a change in accounting estimate.
  1. True B) False

Answer: B

• Accounting policy changes are only justifiable when there is a change to a primary source of GAAP.
  1. True B) False

Answer: B

• Accounting policy changes must always be handled retrospectively.
  1. True B) False

Answer: B

• The failure to expense a prepaid asset is an example of a counterbalancing error.
  1. True B) False

Answer: B

• Accounting changes reported by using the current approach, require that the “catch-up adjustment” include the effect on earnings in the year of the change.
  1. True B) False

Answer: B

• If a change in estimate and a change in principal occur on the same item and at the same time, the one that is dominant is reported.
  1. True B) False

Answer: B

• Changes in accounting policy are always voluntary in nature.

1. A) True B) False

Answer: B

• A change in the useful life of an asset requires an accounting estimate change, which affects only periods after the change, is made.
  1. True B) False

Answer: B