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Schoen Company experienced a change in accounting principle which it

accounted for in the following manner: opening balances were not adjusted and no attempt
was made to allocate charges or credits for prior events. This method of recording an
accounting change is known as handling the change:
A. prospectively.
B. currently.
C. retrospectively.
D. haphazardly.

1 Answer

2 votes

Final answer:

In accounting, when a change in principle is applied to future transactions without adjusting opening balances or past events, it is handled prospectively. The correct answer is option A.

Step-by-step explanation:

The method of recording an accounting change where opening balances are not adjusted and there is no attempt to allocate changes for prior events is known as handling the change prospectively. When a company adopts a new accounting principle but does not adjust opening balances or allocate charges or credits for prior events, it means that the change is applied only to future transactions. The company does not go back and restate its financial statements for previous periods.

This means that the new accounting principle is applied to transactions, events, and conditions occurring after the date of the change, and any comparative information provided in financial statements is not restated.

The correct answer to this question is option A: prospectively.

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