F1M6

Question 1

Change in accounting estimate

Answer 1

prospective; not an error. Do not restate in prior years

Question 2

What kind of change is a change in inventory or depreciation methods

Answer 2

change in estimate
prospective
do not restate prior years

Question 3

What does a change in accounting estimate effect

Answer 3

current and future income from continuing operations

Question 4

When should you disclose a change in estimate

Answer 4

if it affects several future period

Question 5

Treatment for a change in accounting principle

Answer 5

retrospective. only between GAAP and NonGAAP

adjustment to retained earnings in earliest period presented

Question 6

Error in accounting

Answer 6

Non-GAAP to GAAP

Question 7

Rule of preferability

Answer 7

changing accounting methods have to be justified

only if required by GAAP or new principle is preferable (more fairly presented)

Question 8

Cumulative effect

Answer 8

adjust beginning retained earnings NET OF TAX

Question 9

When to report changes in RE

Answer 9

the earliest period presented for the cumulative effect of the change and prior period using the new method

Question 10

accounting treatment to handle change TO LIFO or depreciation

Answer 10

handled prospectively (because it is impractical to estimate)

Question 11

Applications of general rule

Answer 11

1. adjust beginning retained earnings to earliest period (net of tax)
2. New accounting principle for all periods presented

Question 12

Change in accounting entity

Answer 12

changes in the company

Question 13

Treatment of changes in accounting entity

Answer 13

restatement to reflect information in all period presented

Question 14

Treatment of accounting error

Answer 14

prior period adjustment

Question 15

Prior period adjustment is the same as

Answer 15

error correction