A change in an accounting estimate is:
A) Reflected in past financial statements.
B) Reflected in future financial statements and also requires modification of past statements.
C) Reflected in current and future years' financial statements, not in prior statements.
D) Not allowed under current accounting rules.
E) Considered an error in the financial statements.

Question

Quizplus · Accepted Answer

A change in accounting estimate is not reflected in past financial statements as it is applied prospectively from the time the estimate is changed. It is also not considered an error in the financial statements. The change will be reflected in the current and future years' financial statements, but not in prior statements.

A Change in an Accounting Estimate Is