A change in accounting estimate is always accounted for
A)using a prior period adjustment
B)retrospectively
C)using the cumulative effect method
D)prospectively

Question

Quizplus · Accepted Answer

A change in accounting estimate is accounted for prospectively, meaning it affects current and future periods, but not past periods. Retrospective application and cumulative effect methods are used for accounting changes, not changes in accounting estimates. Using a prior period adjustment is also not appropriate as it would require restating prior period financial statements, which is not required for a change in accounting estimate.

A Change in Accounting Estimate Is Always Accounted for