Explain Why a Change in Accounting Policy Requires the Adjustment

question 75

Essay

Explain why a change in accounting policy requires the adjustment of both prior and future periods, whereas a change in estimate requires only adjustment of current and future periods.

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Definitions:

Job Cost Sheets

Documents that track the direct materials, direct labor, and manufacturing overhead for a specific job in a manufacturing process.

Time Tickets

Documents used to record the amount of time an employee spends on various tasks, often used for payroll or job costing.

Direct Labor

The wages and related benefits of employees who are directly involved in the production of goods or services.

Materials Requisition

The process of requesting and withdrawing materials from inventory for use in the production process or for other operational needs.