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.

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Definitions:

Business Shutdown

A temporary or permanent cessation of operations by a firm due to financial difficulties or external circumstances.

Construction Firm

A business entity engaged in the construction of buildings, infrastructure, and other physical structures.

Sunk Cost

Costs that have already been incurred and cannot be recovered.