When Changes in an Accounting Principle Impact Income of Periods

Multiple Choice

When changes in an accounting principle impact income of periods that were prior to the earliest presented on the financial statements:

A) retained earnings is not adjusted.
B) the cumulative impact on the earlier periods is reported as an adjustment to retained earnings in the earliest period presented.
C) the cumulative impact on the earlier periods is reported as an adjustment to retained earnings in the latest period presented.
D) none of the above occur.