F1 - accounting chages and error corrections.

Question 1

explain “change in accounting principle”?

Answer 1

Must be GAAP to GAAP or IFRS to IFRS. GR: in retrospective application.
the direct effect of changing accounting principle is that needs re adjustment financial statement of prior period.

Question 2

what is the cumulative effect of a change in accounting principle on the retained earning statement?

Answer 2

a change from LIFO to FIFO is a change in accounting principle.
an adjustment to the beginning balance of retain earning is necessary. (Retro Method)
cumulative effect of changes in accounting will be recorded in retain earning - this is retrospection method.