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Which of the following changes would normally require some footnote disclosure?
A) a correction of an error
B) a change in reporting entity
C) a change in accounting estimate
D) all of these
Correction Of An Error
Adjustments made in financial statements to amend mistakes or omissions in previously issued financial reports.
Reporting Entity
An entity for which there are users who rely on the entity's financial reports for making economic decisions.
Accounting Estimate
Approximations or judgments made by management in preparing financial statements, necessary when a precise value cannot be readily determined.
- Differentiate between alterations in accounting principles, revisions in accounting estimates, and the amendment of inaccuracies.
- Scrutinize the effect of changes in accounting standards and the correction of discrepancies on financial accounts.
- Acquire a thorough understanding of how retrospective and prospective methods are applied in adjustments to accounting practices.
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Learning Objectives
- Differentiate between alterations in accounting principles, revisions in accounting estimates, and the amendment of inaccuracies.
- Scrutinize the effect of changes in accounting standards and the correction of discrepancies on financial accounts.
- Acquire a thorough understanding of how retrospective and prospective methods are applied in adjustments to accounting practices.
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