Changes in an Entity's Accounting Choices Either Affect "Consistency" in the Application

question 40

Essay

Changes in an entity's accounting choices either affect "consistency" in the application of GAAP or they do not. For each item listed below, state whether the item affects consistency and identify the effect the change will have on the audit report.
1. Change in accounting estimate.
2. Correction of an error in principle.
3. Change in reporting entity.
4. Correction of an error that does not involve an accounting principle.
5. Change in accounting principle.
6. Change in classification and reclassification.
7. Change expected to have a material future effect.

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Definitions:

Population

The entire group of individuals or instances about which scientists are seeking to collect data.

Inferential Statistics

Inferential statistics involves using data from a sample to make inferences or generalizations about a population, often through hypothesis testing or estimation methods.

Population Parameters

Characteristics or measures that describe aspects of a statistical population, such as mean, variance, or standard deviation.

Proposed Package

A suggested set of measures, items, or conditions put forward for consideration or acceptance.