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

question 72

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.

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Definitions:

Intercept

In regression analysis, the constant term that represents the value of the dependent variable when all the independent variables are zero.

Alpha

In finance, a measure of performance on a risk-adjusted basis, calculating the excess return of an investment relative to the return of a benchmark index.

Regression Equation

An equation that describes the average relationship between a dependent variable and one or more explanatory variables.

Beta

A metric representing the instability or consistent risk involved in a security or portfolio relative to the entire market.