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Question 1: State the two types of accounting errors and state whether they are recognized retrospectively or prospectively
Question 2: For each of the following items below, indicate the type of accounting change and how each is recognized or accounted for in the accounting records in the current year
(a) Change from straight-line method of depreciation to sum-of-the-years'-digits
(b) Change from the cash basis to accrual basis of accounting
(c) Change from cost-recovery to percentage-of-completion method on construction contracts.
(d) Change due to failure to record depreciation in a previous period
(e) Change in the realizability of certain receivables
(f) Change from average cost to FIFO method for inventory valuation purposes
Financial Statement Analysis and Preparation
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Computation of Free Cash Flow
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