ACC 400 AID Successful Learning / acc400aid.com ACC 400 AID Successful Learning / acc400aid.com | Page 21

c.
$50,000 will be held as restricted retained earnings and
paid out at some future date.
d.
preferred stockholders will receive $25,000 and the
common stockholders will receive $25,000.
18.
When a change in accounting principle occurs
a.
prior years' financial statements should not be changed to
reflect the newly adopted principle.
b.
the new principle should be used in reporting the results of
operations of the current year.
c.
the cumulative effect of the change in principle should be
reflected on the income statement as of the beginning of the next year.
d.
the cumulative effect of the change in accounting principle
should be classified as an extraordinary item on the income statement.