Change in accounting principle,

Definition of Change in accounting principle:

1. Implementing a generally accepted accounting principle different from the one formerly used. Businesses can often select from two or more accepted accounting principles, with the change results reported as an adjustment to the retained earnings opening balance for the earliest accounting period presented . If multiple changes in principle are made, previous years financial statements must be revised to show what the information would have looked like with the new principles in use. The nature and rationalization for any principle change must be disclosed. An example of a change in accounting principles would be changing inventory systems, such as a change from FIFO basis to another inventory system.