The Accountant in Preparation for the Financial Statement for the Year

question 5

Multiple Choice

The accountant in preparation for the financial statement for the year 2007 realised an error in the determination of recoverable amounts in last year's financial statements.This error had it been detected in 2006 would have required the recognition of impairment losses amounting to $500,000.To comply with AASB 108,Accounting Policies,Changes in Accounting Estimates and Errors,the accountant should.

• A) Make a prospective change to the 2007 figures, on the basis that he has made an error in 2006.
• B) Make a prospective change to the 2007 figures, on the basis that he is making a change to an estimate in 2006.
• C) Make a retrospective change to the 2007 figures, on the basis that that this is a change in accounting estimates.
• D) Make a retrospective change to the 2007 figures, on the basis that he is changing the accounting policy in 2006.
• E) Make a retrospective change to the 2007 figures, on the basis that he has made an error in 2006.

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Definitions:

Gradual Exposure

A therapeutic technique involving slowly introducing the subject to the source of their fear or anxiety to lessen the response over time.

Mirror Neurons

Neurons that fire both when an individual acts and when the individual observes the same action performed by another, thought to be linked to empathy and learning by imitation.

Imitative Behavior

The action of copying or mimicking the behavior, actions, or gestures of others as a form of learning or social interaction.

Interneurons

A type of neuron that transmits signals between sensory neurons and motor neurons, playing a critical role in reflexes and the central nervous system's processing of information.