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)
2
Q
Changes in Accounting Principle
A
Retrospective
only if required by GAAP
Direct Effects
Indirect Effects
Cumulative Effects - net of taxes
3
Q
Exceptions to the General Rule - AP
A
Impracticable to Estimate
Change in Depreciation
4
Q
Changes in Accounting Entity
A
Retrospective
5
Q
Error Correction
A
Prior Period Adjustment
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)