PAS 8 - Acc. Policies, Changes in Acctg Estimates & Errors

The two types of accounting changes are:

• change in accounting policy & change in accounting estimate

• change in accounting standards & principles

• change in measurement basis, realizations & misapplication of principles

It is adopted by an entity in preparing and presenting its financial statements.

• Accounting Standards

• Conceptual Framework

• PAS 8

• Accounting Policies

When it is difficult to distinguish a change in accounting policy from a change in accounting estimate, the change is treated as a change in accounting policy.

• True

• False

A change in measurement basis is most likely a

• Change in accounting policy

• Change in accounting estimates

• Change in accounting errors

• None of the above

A correction of prior period error is accounted for by

• retrospective application

• retrospective restatement

• prospective application

• impracticable application

An error of commission is doing something wrong while an error of omission is not doing something that should have been done.

• True

• False

Which of the following is a change in accounting estimate?

• Change from cost model to fair value model of measuring investment property

• Change in the method of recognizing revenue from long-term construction contracts

• Change in depreciation method, useful life or residual value of an item of property, plant, and equipment

Entity A changes its inventory cost formula to FIFO to weighted average. How should Entity A account for this change?

• by retrospective restatement, as a change in accounting policy

• by prospective application, as a change in accounting estimate

• by retrospective application, as a change in accounting policy

• as a correction of prior period error

According to PAS 8, a change in accounting estimate is accounted for

• using transitional provision, if any

• retrospectively

• prospectively

• a,b, or c, whichever is most appropriate

According to PAS 8, in the absence of a PFRS that specifically deals with a transaction, management shall

• refer to the concepts under the Conceptual Framework

• adopt the provisions of the US GAAP

• use its judgement in developing and applying an accounting policy that results in information that's relevant and reliable

• consider the applicability of relevant accounting literature