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Difference between accounting changes and accounting errors

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What is the difference between accounting changes and accounting errors? What are some similarities and differences in how they affect the financial statements?

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Four Types of Accounting Changes
1. Change in accounting principle-Change from one generally accepted accounting
principle to another.
2. Change in accounting estimate-Revision of an estimate because of new information or
new experience.
3. Change in reporting entity-Change from reporting as one type of entity to another type
of entity.
4. Correction of an error-Correction of an error caused by a transaction being recorded
incorrectly or not at ...

Solution Summary

The four types of accounting changes are discussed and how each is treated for GAAP.

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Accounting Problems

Accounting Problems.

Classification of product cost and period cost, statement of cash flows for Millco, income statement and balance for Aron Concrete, and cash budget of Ritewell Publishers.

See attached file for full problem description.

Bright, Inc., a producer of educational toys for children, incurs the following types of costs. Classify each cost as a period cost or a product cost by marking an X in the appropriate column. For each item classified as a product cost, indicate whether it would usually be included in direct materials, direct labor, or manufacturing overhead.
The following data is listed for Aron Concrete at their fiscal year end December 31, 2005.

Prepare a balance sheet and income statement (after tax) for Aron Concrete year ending 12/31/05. Classify the balance sheet items into the following categories: current assets, long-term assets, current liabilities, long-term liabilities, stockholders equity. Separate income statement items into revenues and expenses. Points will be deducted if proper form is not used.

The following data is from the
The following data is from the budget of Ritewell Publishers. Half the company's sales are transacted on a cash basis. The other half are paid for with a 1-month delay. The company pays all of its credit purchases with a 1-month delay. Credit purchases in January were $30 and total sales in January were $180.

Given the following example, answer the following questions (remember to show all work):

Average selling price per unit $60.00
Average variable costs per unit $40.00
Fixed costs $1,000,000

1. What is the contribution margin per unit?
2. What is the margin as a percent of sales?
3. What is the breakeven point in units?
4. What is the breakeven point in dollars (rounded)?
5. If the company adds a new plant & equipment, increasing fixed costs by $500,000 per year, how many units will they have to sell to break even?
6. If the company raises the selling price to $65 per unit (using original data), how many units would they have to sell to break even?
7. If the company reduces their price by $10 per unit (using original data), how many units would they have to sell to break even?

Presented below are the comparative balance sheets for Millco, Inc., at January 31 and February 28, 2006.

Prepare a statement of cash flows that explains the change that occurred in cash during the month. You may assume that the change in each balance sheet amount is due to a single event (e.g., the change in the amount of production equipment is not the result of both a purchase and a sale of equipment).

This is a two-step process. Step 1 - Use the space to the right of the January 31 data to enter the difference between the February 28 and January 31 amount of each balance sheet item; these are the amounts that will be in your solution for Step 2. In Step 2, use the drop-down box to describe the category/change in value, then place the appropriate amount in the yellow shaded cells. Use the appropriate cell formulas to calculate the totals.

Remember that the change in cash from January to February MUST be the same on the Balance Sheet as the Net Increase/Decrease In Cash For The Month in the Cash Flow statement!!!!!!! Also watch your plus/minus values for the various sources/uses of cash!

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