If a company changes its accounting principle from FIFO to weighted average, how should this change be reflected in the financial statements under GAAP and IFRS?

• A. Adjust only the current period's financial statements.
• B. Retrospectively adjust prior periods to reflect the new principle.
• C. Apply the new principle prospectively from the current period.
• D. Disclose the change in the notes without adjusting prior periods.

Answer: (B)