The 3 Types of Accounting Changes

This video outlines the 3 types of accounting changes that can affect the consistency and comparability of the financial statements.  The changes are:  (1) changes in accounting principle, (2) changes in reporting entity, and (3) changes in accounting estimates.  

Both changes in accounting principle and changes in reporting entity are applied retrospectively whereas changes in accounting estimates are applied prospectively.  

Also, if you find errors in the financial statements (e.g., math mistakes, incorrect applications of GAAP), you need to restate the financials of prior periods.—
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• #education
• #accounting
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• #accounting_change
• #change_in_accounting_principle
• #change_in_accounting_estimate