3. True or False 2. Errors in financial statements result from mathematical mist

ID: 2520666 • Letter: 3

Question

True or False

2. Errors in financial statements result from mathematical mistakes or oversight or misuse of facts that

existed when preparing the financial statements.

3. Adoption of a new policy in recognition of events that have occurred for the first time or that were

previously immaterial is treated as an accounting change.

4. Retrospective application refers to the application of a different accounting policy to recast previously

issued financial statements—as if the new policy had always been used.

5. When a company changes an accounting policy, it should report the change by reporting the cumulative

effect of the change in the current year’s income statement.

6. One of the disclosure requirements for a change in accounting policy is to show the cumulative effect of

the change on retained earnings as of the beginning of the earliest period presented.

7. Companies report changes in accounting estimates retrospectively.

8. When it is impossible to determine whether a change in policy or change in estimate has occurred,

the change is considered a change in estimate.

9. Companies account for a change in depreciation methods as a change in accounting policy.

10. Companies record corrections of errors from prior periods as an adjustment to the beginning balance of

retained earnings in the current period

1). False

2). True

3).False

4).True

5).False

6).True

7).False

8). True

9). False

10).True

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