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ABC started operations two years ago. Company management has decided to change the method of accounting for inventory from FIFO to Weighted Average. Due to
ABC started operations two years ago. Company management has decided to change the method of accounting for inventory from FIFO to Weighted Average. Due to the short time operating in the market and the fact that its inventory is composed of few items, the company has kept a file of all its purchases (units and costs) from the first day of operations. In this situation,
Select one: a. the cumulative effect of the change should be ignored, even though it can be easily determined and is not prohibitively expensive. b. the general rule of a change in principle applies: retroactive treatment. c. the change is allowed only because the cumulative effect of the change can be determined. d. the company can choose the procedure that best benefits it.
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