Question

Diversified Systems, Inc. reports consolidated financial statements this year in place of statements of individual companies reported in previous years. This results in:

Multiple Choice

A. An accounting change that should be reported prospectively.

B. An accounting change that should be reported by restating the financial statements of all prior periods presented.

C. A correction of an error.

D. Neither an accounting change nor a correction of an error.

Answer 1

Ans is

B An accounting change should be reported by restating the financial statements of all prior periods presented.

Reason:-

It is done in order to make financial statements comparable.

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