Question

All of the following statements regarding changes in accounting principles are true except which of the following?

- Most changes in accounting principles are only reported in current periods when the principle change takes place.
- Changes in accounting principles are allowed when new principles are preferable to old ones.
- Most changes in accounting principles are retroactively reported.
- Consistency is one of the biggest concerns when a change in accounting principle is undertaken.

Answer 1

Most changes in accounting principles are retroactively reported, not just in current periods, to ensure consistency and comparability in financial reporting.

Step-by-step explanation:

The statement "All of the following statements regarding changes in accounting principles are true except which of the following?" asks us to identify the incorrect statement among the given options concerning changes in accounting principles. The incorrect statement is: Most changes in accounting principles are only reported in current periods when the principle change takes place. This is false because most changes in accounting principles require retroactive restatement to make past financial statements comparable to current ones. It is essential to maintain consistency in financial reporting, and changes are indeed allowed when new principles are considered more preferable.