F1, M6 Flashcards
Errors, Estimates and Corrections
1
Q
Change in Estimate
A
Prospective, current and future Income, NOT net of tax
2
Q
Change in Principle
A
Retrospective, adjust beginning retained earnings in earliest period, net of tax
3
Q
Change in Principle and Estimate
A
Ex) Change in depreciation
Prospective, adjust beginning retained earnings, net of tax
4
Q
Change in Entity
A
Retrospective, all comparative FS should be restated, net of tax
5
Q
Error Correction
A
Adjustment, correct error in CY or adjust beginning RE
6
Q
Retained Earnings Calc (Plug)
A
Beginning Balance \+/- Adjustments \+ Net Income - Dividends = Ending Balance
Debit to decrease
Credit to increase
