If a Change in Estimate and a Change in Principal

question 48

True/False

If a change in estimate and a change in principal occur on the same item and at the same time, the one that is dominant is reported.

---

Definitions:

Factoring Transaction

The process where a business sells its accounts receivable (invoices) to a third party (factor) at a discount, in exchange for immediate cash.

GAAP

Generally Accepted Accounting Principles, a set of rules and standards designed to ensure consistency, fairness, and accuracy in financial reporting and accounting practices in the U.S.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is global in scope.

Factoring Transaction

A financial transaction where a business sells its accounts receivable to a third party at a discount to obtain immediate cash.