Chapter 23 Accounting Changes and Error Analysis Flashcards
1
Q
The 3 types of accounting changes are:
A
Change in accounting principal
change in accounting estimate
change in reporting entity
2
Q
What is the “fourth” change in accounting
A
Errors in financial statements
3
Q
Changes in accounting principal involves…
A
a change from one principal to another
4
Q
What approach do you use for changes in accounting principals?
A
Retrospective approach
- adjust financial stmts for each prior pd presented
- Adjusts the carrying amount of assets and liab. as of the beg. of the 1st yr presented
5
Q
What are the major disclosure requirements for reporting a change in principal?
A
- the nature and reason of changing
- Description of prior pd info (retro adjustment)
- the effect on net income
- the cumulative effect on RE
6
Q
What is the formart of the RE Statement
A
RE, JAN 1
Adjustment: (If any)
Net Income
RE Dec, 31.
7
Q
What is the format of the RE Statement
A
RE, JAN 1
Adjustment: (If any)
Net Income
RE Dec, 31.