In order to have comparability of financial statements for successive periods for an entity, the accountant must be consistent in the application of generally accepted accounting principles (quality of consistency). However, sometimes there is justification for a change. The accountant must then meet the requirements of full disclosure in reporting the change. Accounting changes are discussed in this chapter.

The accountant may be consistent in the application of accounting practices but may make some type of error (such as a math mistake or misapplication of generally accepted accounting principles). When the error is discovered, the effects must be properly reported. Error analysis is also discussed in this chapter.


  1. Identify the types of accounting changes. The three different types of accounting changes are as follows: (1) Change in accounting principle: a change from one generally accepted accounting principle to another generally accepted accounting principle. (2) Change in accounting estimate: a change that occurs as the result of new events or additional information or as more experience is acquired. (3) Change in reporting entity: a change from reporting as one type of entity to another type of entity.

  2. Describe the accounting for a change in accounting principle. A change in accounting principle involves a change from one generally accepted accounting principle to another ...

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