Many Income Statement Numbers Are Based on Estimates

question 103

Essay

Many income statement numbers are based on estimates. Explain the reporting required when the income effect of a change in estimate is material.

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Definitions:

Average Number

The result obtained by adding several quantities together and then dividing this total by the number of quantities.

Minimum Number

The smallest value in a set of numbers.

Comparisons

The process of evaluating two or more entities to determine their similarities or differences.

Sequential Search

A search algorithm that checks each element in a list one at a time until the desired element is found.