chapter 20

Question 1

Accounting information should be…

Answer 1

Reliable and relevant

Question 2

what are the 4 accounting changes

Answer 2

changes in accounting principal, accounting estimates, reporting entity and error corrections

Question 3

changes in accounting principal

Answer 3

a change from one gaap to another

Question 4

changes in accounting estimates

Answer 4

revision of a previously calculated estimate based on new information

Question 5

change in reporting entity

Answer 5

changes from reporting as one type of entity to another

Question 6

error corrections

Answer 6

correcting an error from a previously recorded transaction

Question 7

what are the 3 approaches to making changes

Answer 7

retrospective, modified retrospective, prospective

Question 8

retrospective approach

Answer 8

typically occurs due to voluntary changes

Question 9

prospective approach

Answer 9

typically reserved for changes in estimates

Question 10

adopting new FASB standards is

Answer 10

an accounting principal

Question 11

changes in inventory method is

Answer 11

an accounting principal

Question 12

a change from cost method to equity method is

Answer 12

an accounting principal

Question 13

change in depreciation method is

Answer 13

an accounting estimate AND accounting principal

Question 14

change in the useful life of a depreciable asset is

Answer 14

an accounting estimate

Question 15

change in estimate pertaining to a pension plan is

Answer 15

an accounting estimate

Question 16

modified retrospective

Answer 16

adjustment is made at the beginning of adoption period