Changes in accounting

Question 1

3 types of changes

Answer 1

• changes in estimate
• changes in policy
• correction to prior period

Question 2

Change in estimates

Answer 2

New facts create change so apply going forward

Question 3

Change in policy

Answer 3

To make a policy change must

• The change provides more reliable info to users
• GAAP has required the change

policies - dep method, FIFO etc

Must change past f/s too

Question 4

Correction of errors

Answer 4

Retrospectively