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

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2
Q

What is the “fourth” change in accounting

A

Errors in financial statements

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3
Q

Changes in accounting principal involves…

A

a change from one principal to another

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4
Q

What approach do you use for changes in accounting principals?

A

Retrospective approach

  1. adjust financial stmts for each prior pd presented
  2. Adjusts the carrying amount of assets and liab. as of the beg. of the 1st yr presented
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5
Q

What are the major disclosure requirements for reporting a change in principal?

A
  1. the nature and reason of changing
  2. Description of prior pd info (retro adjustment)
  3. the effect on net income
  4. the cumulative effect on RE
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6
Q

What is the formart of the RE Statement

A

RE, JAN 1
Adjustment: (If any)
Net Income
RE Dec, 31.

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7
Q

What is the format of the RE Statement

A

RE, JAN 1
Adjustment: (If any)
Net Income
RE Dec, 31.

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