ACCOUNTING CHANGES AND ERROR CORRECTIONS Flashcards

1
Q

Changes in Accounting Estimate

A

Prospective

Estimate - incorrect

Changes in estimates affect only the current and subsequent periods (not prior periods and not retained earnings)

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2
Q

Changes in Accounting Principle

A

Retrospective
only if required by GAAP

Direct Effects
Indirect Effects
Cumulative Effects - net of taxes

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3
Q

Exceptions to the General Rule - AP

A

Impracticable to Estimate
Change in Depreciation

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4
Q

Changes in Accounting Entity

A

Retrospective

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5
Q

Error Correction

A

Prior Period Adjustment

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6
Q

Comparative Financial Statements Presented and Not Presented

A
  • Correct information ( if year is presented)
  • Adjust beginning RE of the earliest year presented ( if the year is not presented)
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