Change in Accounting Policies

Question 1

These are the specific principles, bases, conventions, rules, and practices applied by an entity in preparing and presenting financial statements.

Answer 1

Accounting Policies

Question 2

When may a change in accounting policy be applied?

Answer 2

1. Required by Standard
2. It will result to a more faithfully represented FS

Question 3

If an accounting policy is changed voluntarily, the change shall be applied?

Answer 3

Retrospectively

Question 4

This is applying a new accounting policy to transactions, other events and conditions as if that policy had always been applied.

Answer 4

Retrospective Application

Question 5

What is PAS 8?

Answer 5

Accounting Policies, Changes in Accounting Estimates, and Errors

Question 6

True or False: If comparative information is presented, the financial statements of the prior period presented need not be restated to conform with the new accounting policy.

Answer 6

False. It needs to be restated.

Question 7

True or False: Retrospective application of a change in accounting policy is not required if it is impracticable to determine the cumulative effect of change.

Answer 7

True

Question 8

This means that the new accounting policy is applied to events and transactions occurring after the date at which the policy is changed.

Answer 8

Prospective Application

Question 9

When it is impracticable to apply a new accounting policy retrospectively, the entity shall apply it?

Answer 9

Prospectively

Question 10

If the amount of adjustment on the opening balance of retained earnings cannot be reasonably determined, how should the new accounting policy be applied?

Answer 10

Prospectively

Question 11

Are existing balances recalculated?

Answer 11

No

Question 12

True or False: Adjustments relating to prior periods are made either to the opening balance of retained earnings or other component of equity.

Answer 12

False. No adjustments should be made to these components because existing balances are not recalculated.

Question 13

This is a change whereby entities change their nature and report their operations in such a way that the FS are in effect those of a different reporting entity.

Answer 13

Change in reporting entity

Question 14

A change in reporting entity is what kind of change? and how should it be applied?

Answer 14

Change in accounting policy

Applied retrospectively

Question 15

In a change in reporting entity, should the FS of all prior periods presented be restated to show financial information for the new reporting entity.

Answer 15

Yes