Describe the Way We Account for a Change in Estimate

question 69

Essay

Describe the way we account for a change in estimate. What is the appropriate accounting if we are unable to determine whether a change is a change in estimate or a change in principle?

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a dataset, often used in inventory valuation.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its short-term assets.

Current Liabilities

Current liabilities are financial obligations a company is expected to pay within one year.

Short-term Investments

Short-term investments are financial assets that a company plans to convert into cash typically within a year, such as stocks or government bonds.