Reference no: EM132811404

Problem 1: What are the major reasons why companies change accounting policies?

a) Desire to show better profit picture.
b) Desire to increase cash flows through reduction in income taxes.
b) Requirement by International Accounting Standards Board to change accounting methods.
c) All of above

Problem 2: State how each of the following items is reflected in the financial statements.

a) Change in accounting policy; retrospective application to prior period financial statements.
b) Correction of an error and therefore prior period adjustment; adjust the beginning balance of retained earnings.
c) Change in accounting estimate; currently and prospectively. Part of operating section of income statement.
d) All of above