Fessing Up: Correcting Errors and Reporting Changes in Methods
In This Chapter
Understanding and recognizing accounting changes
Reporting accounting changes
Accounting for estimates
Life is full of changes, and some can be pretty inconvenient. This chapter takes a look at how to best handle changes in an accounting method, such as switching one way of valuing inventory to another. For example, your company may switch to using last-in, first-out (LIFO) instead of its previous first-in, first-out (FIFO) method.
Human error is as inevitable as change, and this chapter also talks about how to gracefully (and correctly) handle those hair-raising moments when an accountant discovers he made an inadvertent error in reporting accounting transactions in the current or previous accounting period. Don’t worry — this chapter helps you figure out how to properly fix and forgive such errors.
The chapter also takes a look at changes in accounting estimates. An accounting estimate is merely your best guess on how a future accounting transaction will play out. These future ...