Accrual Accounting Requires Frequent, Ongoing Changes in Estimates

question 180

Multiple Choice

Accrual accounting requires frequent, ongoing changes in estimates.Which of the following is/are not true?

• A)As time passes and conditions change, new information becomes available that causes management to change the estimates required to apply accounting principles.
• B)Firms do not recalculate revenues and expenses of previous periods to incorporate new information involving estimates.
• C)Changes in estimates do not always relate to recurring accrual accounting measurements.
• D)Examples of changes in estimates include the amount of uncollectible accounts and the useful lives of depreciable assets.
• E)Firms report the income effect of these items in the retained earnings as a direct adjustment.

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