Accounting Changes and Error Corrections

Free CPA FAR (Financial Accounting & Reporting) lesson in Select Transactions. 15 min read, ~2,324 words.

Change in accounting principle is retrospective. Restate prior periods and adjust opening retained earnings of the earliest period presented. Change in accounting estimate is prospective. Current and future periods only, no restatement and no opening RE adjustment. Error correction requires restatement. Restate prior periods, adjust opening RE, and disclose the...

What this lesson covers

• Content
• Example 1
• Example 2
• Common Mistakes
• Check Your Understanding
• Exam Shortcuts

Learning objectives

• III.A1

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