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Question 1

a change in accounting estimate occurs when

Answer 1

it is determined that the estimate previously used by the company is incorrect.

Question 2

T/F changes in accounting principle that are inseparable from a change in estimate

Answer 2

ture

Question 3

a company buys a truck for 90, the useful year is expected to be 10Y, during the third year, the firm realized that the truck will only going to last a total of 5Y, the firm used straight line method, what is the depr. cot in year 4

Answer 3

24

Question 4

change from one GAAP accounting principle to another GAAP accounting principle is called _

Answer 4

a change in accounting principle

Question 5

an accounting principle may be changed only if required by GAAP or _

Answer 5

if the alternative principle is preferable and more fairly presents the information.

Question 6

Changes in accounting estimate are accounted for

Answer 6

prospectively

Question 7

Change in Estimate Affecting Future Periods should be

Answer 7

disclosed in the notes to the financial statements.

Question 8

“An accounting change should not be made for a transaction or event in the past that has been
terminated or is nonrecurring” is rule of

Answer 8

nonrecurring change

Question 9

_____ of a change in accounting principle are adjustments that would be necessary
(to restate)the financial statements of prior periods.

Answer 9

The direct effects

Question 10

_____ of a change in accounting principle are differences in non-discretionary items based on earnings (e.g., bonuses) that would have occurred if the new principle had been used
in prior periods.

Answer 10

The indirect effects

Question 11

cumulative effects should be reported as ____ and adjusted in ____

Answer 11

net of tax; retained earning

Question 12

In year 5, A firm decided to switch to percentage of completion(poc) methods for a contract deal, the tax rate is 30%, prior to year 5, poc 800, cc 600, The cumulative effects net of income tax should be

Answer 12

140

Question 13

What is the general rule of reporting changes in accounting principle?

Answer 13

it should be recognized by adjusting beginning retained earnings in the earliest period presented for the cumulative effect of the change, they should be restated if prior period financial statement are presented.

Question 14

Under IFRS, an entity must disclose ___ balance sheet and ____of other financial statements

Answer 14

3, 2

Question 15

What are exceptions to general rule of change in accounting principle?

Answer 15

1. impracticable to estimate; 2. change in depreciation methods;

Question 16

if a change in accounting entity in current year, all previous financial statements along with the current year should be

Answer 16

restated to reflect the information for the new reporting entity

Question 17

Does IFRS include the concept of a change in accounting entity?

Answer 17

no

Question 18

Are error corrections accounting changes?

Answer 18

no

Question 19

Change from None-GAAP to GAAP is considered as

Answer 19

error correction

Question 20

error corrections includes which 3 situations?

Answer 20

math mistakes; misapplication of GAAP; change from none GAAP to GAAP.

Question 21

correcting information with errors

Answer 21

p55 FAR

Question 22

difference of error corrections rules under IFRS and GAAP

Answer 22

IFRS allows entity restating information propectively from the earliest date that is practicable. US GAAP does not have an impracticality exemption for error corrections.