A Change in Accounting Estimate Is

question 81

Multiple Choice

A change in accounting estimate is:

• A) Reflected in current and future financial statements and also requires modification of past statements.
• B) Reflected only in current and future financial statements.
• C) Both reflected only in current and future financial statements and a change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment.
• D) A change in a calculated amount used in the financial statements resulting from new information or subsequent developments and from better insight or improved judgment.
• E) None of these answers is correct.

---

Definitions:

Purchase Price

The amount of money paid to acquire a good, service, or financial asset.

Face Value

The nominal value printed on a bond or stock certificate; it does not fluctuate with market prices.

Forward Rate

The agreed-upon price for a transaction that will occur at a future date, as in a forward contract.

Zero-Coupon Bond

A bond that is sold at a discount and pays no interest, but is redeemed at its face value at maturity, generating a profit for the holder.