The change in accounting estimate should be treated currently and prospectively. True or false
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- The cumulative effect of an accounting change should generally be reported as an adjustment to the beginning balance of retained earnings in tin period in which the change is made for a:Describe the effect on the financial statements when an adjustment is prepared that records (a) unrecorded revenue and (b) unrecorded expense.Define a change in estimate and provide an example. When is a change in accounting principle responsible for a change in accounting estimate?
- What are the implications of a revised accounting estimate?How is a change in accounting estimate applied?Which type of accounting change should always be accounted for in current and future periods? Change in accounting policy Change in reporting entity Change in accounting estimate Correction of an error
- How should a change in accounting estimate be recognized and disclosed in the financial statements?Which of the following statements about a change in accounting estimate is not true? A. A change in accounting estimate can only be made when it is required to comply with an accounting standard or interpretation. B. Changes in accounting estimates result from new information or new developments. C. The effects of a change in accounting estimate should be applied prospectively. D. A change in estimate is an adjustment of the carrying amount of an asset or a liability, or the amount of the periodic consumption of an asset.What is the difference between reporting accounting changes, changes in estimates, and error corrections. Provide an example of each and discuss the effect on the financial statements.
- Why should the beginning retained earnings be adjusted for prior period errors and effects of change in accounting policy?If it is impracticable to determine the cumulative effect of an accounting change to any of the prior periods, the accounting change should be accounted for a. as a cumulative effect change on the income statement b. as a prior period adjustment c. on a prospective basis d. as an adjustment to retained earningsProspective application of recognizing the effect of a change in an accounting estimate means A. correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occured B. recognizing the effect of the change in the accounting estimate in the current and future periods affected by the change C. applying a new accounting policy to transactions other events and conditions as if the policy had always been applied D. Any of the choices
