A change in an accounting estimate is:
A)Reflected in past financial statements.
B)Reflected in future financial statements and also requires modification of past statements.
C)A change in a calculated amount that is part of current and future financial statements that results from new information or subsequent developments and from better insight or improved judgment.
D)Not allowed under current accounting rules.
E)Considered an error in the financial statements.

Question

Quizplus · Accepted Answer

A change in an accounting estimate is a change in a calculated amount that is part of current and future financial statements that results from new information or subsequent developments and from better insight or improved judgment. It is not reflected in past financial statements, but it is reflected in future financial statements and requires modification of past statements if the change affects them. Such changes are allowed under current accounting rules as they reflect new information or updated judgments and are not considered errors.

A Change in an Accounting Estimate Is