Reference no: EM131763851

Question: The following statements should be classified as true or false.

A.) A change in accounting principle results when a company adopts a new principle in recognition of events that were previously immaterial.

B.) A change in accounting principle results when a company changes from one generally accepted accounting principle to another.

C.) The FASB requires companies to use the prospective (in the future) approach for reporting changes in accounting principles.

D.) When a company changes an accounting principle, it should not adjust any assets or liabilities.

E.) Companies account for a change in depreciation methods as a change in accounting principle.

F.) FASB Statement No. 16 requires that corrections of errors be handled prospectively and shown in the current operating section of the income statement in the year the correction is made.

G.) Companies report the amount of social security taxes withheld from employees as well as the companies' matching portion as current liabilities until they are remitted.

H.) Companies should recognize the expense and related liability for compensated absences in the year earned by employees.

I.) The service period in stock option plans is the time between the grant date and the vesting date.

J.) The FASB takes the position that companies should retrospectively apply the indirect effects of a change in accounting principle.

H.) Retrospective application refers to the application of a different accounting principle to recast previously issued financial statements-as if the new principle had always been used.