Some Aspects Regarding Changes in Accounting Policies, Estimates and Correction of Errors

Diana MATICA (Balaciu) and Victoria Bogdan
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Victoria Bogdan: University of Oradea

Annals of University of Craiova - Economic Sciences Series, 2008, vol. 1, issue 36, 376-382

Abstract: Changes in accounting policies may be precipitated by a change in the company’s economic environment. Accounting changes may also result from changes in ownership that cause a shift in the financial reporting objectives, such as from private to public ownership, or vice versa. At each statement date, whether annual or quarterly, management must re-evaluate the many estimates that are required when financial statements are prepared. Changes in estimates may have a significant impact on reported results. Finally, there are necessary accounting changes that arise when a company discovers that it has made an accounting error in previous accounting periods. Obviously, errors need to be corrected in order to present fairly the financial condition and results of operations of the prior periods, even if the current period is not affected. Consistency and comparability must be achieved by correcting any errors that have a material effect on previously reported results. All types of accounting changes affect reported results, but not necessarily in the same way. The objective of our study is to describe the different types of accounting changes, the ways in which they affect reported results, and the accounting approach used to adjust for the changes.

Keywords: accounting policies; changes in accounting estimates; errors of the prior financial year (search for similar items in EconPapers)
JEL-codes: M00 M41 (search for similar items in EconPapers)
Date: 2008
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