CPA | FAR | Changes in Accounting | LetsLearn Glboal
Channel: LetsLearn Global
Date: 2018-07-11

Change in accounting estimates usually occur when new information comes to light. Common forms include a change in method, rate, or one-time amount adjustments for accounting for the allowance for bad debts and a change in method, estimated useful life, or residual value for an asset or assets that are being depreciated, depleted, or amortized. To account for a change in estimate, the current period and future periods are adjusted to conform to the new estimate. Past financial statements are not adjusted and the entire amount of the adjustment is not usually reflected in the current year (at least in the case of depreciation estimate changes).
Changes in accounting principles, on the other hand, occur when a company is changing from one proper way of doing their accounting to another. Examples include changing the method used for accounting for long-term construction contracts and changing the inventory valuation method (LIFO to FIFO, etc.). When a change in principle occurs, prior financial statements are changed to make them look like they would have had the new method been used all along.
About CPA:
CPA is a globally recognized financial course offered by AICPA (The American Institute of Public Accountants ) USA.

A CPA is a trusted financial advisor who helps individuals, businesses, and other organizations plan and reach their financial goals

All CPAs are accountants, but not all accountants are CPAs.