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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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Solution Summary

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

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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 provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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