Chapter 22

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  1. What are the 3 types of accounting changes?
    • Change in acct'g principle
    • Change in Acct'g estimate
    • change in reporting entity
  2. Are errors considered an accounting change?
  3. Give an example of a change in accounting principle
    • Average cost to LIFO
    • completed-contract to % of completion
  4. What approach is taken for a change in accounting principle?
    A retrospective approach. Prior financial statements must be adjusted so that they can be compared better
  5. Give an example of a change in estimate
    • uncollectible revenues
    • inventory
    • useful lives of assets
    • salvage value of assets
    • change in depreciation methods
  6. How are changes in estimate approached?
    On a prospective basis. Changes in estimates are accounted for in the current period and any future periods
  7. What is an example of a change in reporting entity?
    • consolidated statements instead of individual company statements
    • changing companies included in financial statements
    • changing subsidiary companies in a consolidation
  8. How are changes in reporting entity approached?
    Changes in reporting entity are accounted for retrospectively. The financial statements of all prior periods presented must reflect the change.
Card Set:
Chapter 22
2011-05-04 18:41:53
Accounting changes

Accounting changes
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