Changes in an Estimate, Such as a Change in the Estimated

question 101

True/False

Changes in an estimate, such as a change in the estimated useful life of an asset for depreciation purposes, affect consistency but not comparability, and therefore require an explanatory paragraph in the audit report.

---

Definitions:

Cash for Clunkers

A government program designed to stimulate the economy and improve the environment by incentivizing the trade-in of older, less fuel-efficient vehicles for newer, more efficient ones.

Bullwhip Effect

A phenomenon where small fluctuations in demand at the retail level significantly amplify as they move back through the supply chain towards manufacturers.

Variance of Orders

The statistical measure that represents the variability or spread in the number of orders received over a certain period of time.

Bullwhip Measure

A phenomenon in supply chain management where small changes in demand at the retail level cause increasingly larger changes in demand at the wholesale, distributor, and factory levels.