Accrual accounting requires frequent, ongoing changes in estimates.Which of the following is/are true?
A)As time passes and conditions change, new information becomes available that causes management to change the estimates required to apply accounting principles.
B)Firms do not recalculate revenues and expenses of previous periods to incorporate new information involving estimates.
C)Changes in estimates do not always relate to recurring accrual accounting measurements.
D)Examples of changes in estimates include the amount of uncollectible accounts and the useful lives of depreciable assets.
E)all of the above.

Question

Quizplus · Accepted Answer

All of the statements are true. Accrual accounting requires ongoing changes in estimates as new information becomes available, and past revenues and expenses are not recalculated. Changes in estimates can relate to various recurring accrual accounting measurements, such as uncollectible accounts and useful lives of depreciable assets.

Accrual Accounting Requires Frequent, Ongoing Changes in Estimates