Accounting Policies

Accounting Policies, Changes in Accounting Estimates and
Errors
1. Which of the following is accounted for as a change in

accounting policy: A change in inventory valuation from FIFO
to average method
2. A change in the periods benefited by a deferred cost because

additional information has been obtained is: An accounting
change that should be reported in the period of change and
future periods if the change affects both
3. If it is impracticable to determine the cumulative effect of an

accounting change to any of the prior periods, the accounting
change should be accounted for: On a prospective basis.
4.
Which is the first step within the hierarchy of guidance when
selecting accounting policies?: Apply a standard from IFRS if it
specifically relates to the transaction.
5. An entity that changed from an accounting principle that is not

generally accepted to one that is generally accepted should
report the effect of change, net of applicable income tax, in the
current:Statement of retained earnings as an adjustment of
the opening balance
6. On March 25, 2018, the entity discovered that depreciation

expense for 2017 was overstated. The 2017 financial
statements were authorized for issue on March 1, 2018. What
must the entity do?: Restate the depreciation expense reported
for 2017 in the comparative figures of the 2018 financial
statements.
7. Which is not classified as an accounting change?: Error in the

financial statements
8. Which statement best describes prospective application?:

Applying a new accounting policy to transactions occurring
after the date at which the policy is changed.
9. Which of the following should be treated as change in

accounting policy?:A change from cost model to fair value
model in measuring investment property.
10.
In the absence of an accounting standard that applies
specifically to a transaction, what is the most authoritative
source in developing and applying an accounting policy?: The
requirement and guidance in the standard or interpretation
dealing with similar and related issue.
11. Which term best describes applying a new accounting policy to

transactions as if that policy had always been applied?:
Retrospective application
12. Which of the following is not a justification for a change in

depreciation method?: To conform with the depreciation
method prevalent in a particular industry
13. A change in accounting policy shall be made when: I. Required

by law.; II. Required by an accounting standard or an
interpretation of the standard.; III. The change will result in
more relevant or reliable information about the financial
position, financial performance and cash flows of the entity.; II
and III only
14. How should the effect of a change in accounting estimate be

accounted for?: In the period of change and future periods if
the change affects both
15.
On March 25, 2018, the entity discovered that depreciation
expense for 2017 was overstated. The 2017 financial
statements were authorized for issue on April 1, 2018. What
must the entity do?: Correct the 2017 financial statements
before issuing them.
16. Where it is impracticable to determine the period-specific effect

of the change on comparative information for one or more prior
periods presented, the retrospective application or restatement
is applied: Retrospectively only to the extent that it is
practicable
17.
Which is the best explanation why accounting changes are
classified into change in accounting policy and change in
accounting estimate?: Each change involves different method
of recognition in the financial statements.
18. When an entity changed from the straight line method of

depreciation to the double declining balance method, which of
the following should be reported?: An accounting change that
should be reported currently and prospectively
1. A change in accounting policy requires what kind of adjustment
to the financial statements?: Retrospective adjustment
2. When it is difficult to distinguish between a change in

accounting estimate and a change in accounting policy, the
change is treated as: Change in accounting estimate with
appropriate disclosure
3. Accounting changes are often made even though this may be a

violation of the accounting concept of: Consistency
4. Why is retrospective treatment of a change in accounting

estimate prohibited?: Change in accounting estimate is a
normal recurring correction or adjustment which is the natural
result of the accounting process.
5. A change in accounting policy includes all of the following,

except: A change from one method of depreciation to a
different method of depreciation.
6. A change in reporting entity is actually a change in: Accounting

policy
7. An entity that changed an accounting policy voluntarily should:

Account for the change retrospectively.
8. Prior period errors: Are reflected as adjustment of the opening

balance of retained earnings of the earliest period presented.
9. All of the following should be treated as a change in accounting

policy, except: A new accounting policy of capitalizing
development cost as a project has become eligible for
capitalization for the first time.
10. An entity that changed from cash basis to accrual basis of

accounting during the current year should report: Prior period
adjustment resulting from the correction of an error.
11. A change in accounting policy requires that the cumulative

effect of the change for prior periods should be reported as an
adjustment to: Beginning retained earnings for the earliest
period presented
12. Why is an entity permitted to change an accounting policy?:

The change would result in the financial statements providing
more reliable and relevant information about financial position,
financial performance and cash flows.
13. Which of the following does not represent a change in reporting
entity?: Disposition of a subsidiary or other business unit
14. Applying a requirement of a Standard or an Interpretation is

impracticable when the entity cannot apply it after making
every effort to do so. Which of the following is not included in
the definition of "impracticable"?: The entity would find the
determination of the effect to be immaterial
15. The effect of a change in accounting policy that is inseparable

from the effect of a change in accounting estimate should be
reported: As a component of income from continuing
operations, in the period of change and future periods if the
change affects both
16. When an entity changed the expected service life of an asset,

which of the following should be reported?: An accounting
change that should be reported currently and prospectively
17. When financial statements for a single year are being

presented, a prior period error should: Be shown as an
adjustment of the balance of retained earnings at the start of
the current year
18. During the current year, an entity discovered that ending

inventory reported in the financial statements for the account
for this understatement?: Restate the financial statements with
corrected balances for all periods presented.
19. This means correcting the recognition, measurement and

disclosure of amounts of elements of financial statements as if
a prior period error had never occurred.: Retrospective
restatement
20. An example of a correction of an error in previously issued

financial statements is a change: From cash basis to accrual
basis of accounting.
21. Which of the following is characteristic of a change in

accounting estimate?: It does not effect the financial
statements of prior period
22. A change in the residual value of an asset arising because

additional information has been obtained is: An accounting
change that should be reported in the period of change and
future periods if the change affects both

Accounting Policies

Uploaded by

Copyright:

Available Formats

Accounting Policies

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Accounting Policies

Uploaded by

Copyright:

Available Formats

Accounting Policies, Changes in Accounting Estimates and

1. Which of the following is accounted for as a change in

2. A change in the periods benefited by a deferred cost because

3. If it is impracticable to determine the cumulative effect of an

5. An entity that changed from an accounting principle that is not

6. On March 25, 2018, the entity discovered that depreciation

7. Which is not classified as an accounting change?: Error in the

8. Which statement best describes prospective application?:

9. Which of the following should be treated as change in

11. Which term best describes applying a new accounting policy to

12. Which of the following is not a justification for a change in

13. A change in accounting policy shall be made when: I. Required

14. How should the effect of a change in accounting estimate be

16. Where it is impracticable to determine the period-specific effect

18. When an entity changed from the straight line method of

2. When it is difficult to distinguish between a change in

3. Accounting changes are often made even though this may be a

4. Why is retrospective treatment of a change in accounting

5. A change in accounting policy includes all of the following,

6. A change in reporting entity is actually a change in: Accounting

7. An entity that changed an accounting policy voluntarily should:

8. Prior period errors: Are reflected as adjustment of the opening

9. All of the following should be treated as a change in accounting

10. An entity that changed from cash basis to accrual basis of

11. A change in accounting policy requires that the cumulative

12. Why is an entity permitted to change an accounting policy?:

14. Applying a requirement of a Standard or an Interpretation is

15. The effect of a change in accounting policy that is inseparable

16. When an entity changed the expected service life of an asset,

17. When financial statements for a single year are being

18. During the current year, an entity discovered that ending

19. This means correcting the recognition, measurement and

20. An example of a correction of an error in previously issued

21. Which of the following is characteristic of a change in

22. A change in the residual value of an asset arising because

You might also like