IAS 8 - Accounting Policies, Accounting Estimates and Errors

Vocabulary flashcards covering IAS 8 concepts: accounting policies, accounting estimates, errors, and how changes and restatements are treated.

Accounting policies

The specific principles, bases, conventions, rules and practices that an entity applies when preparing and presenting financial statements.

Accounting estimates

Monetary amounts in financial statements that are subject to measurement uncertainty.

Errors

Omissions from, and misstatements in, the entity’s financial statements for one or more prior periods arising from a failure to use, or misuse of, reliable information that: (a) was available when financial statements for those periods were authorized for issue; and (b) could reasonably be expected to have been obtained and taken into account in the preparation and presentation of those financial statements.

Retrospective application

Applying a new accounting policy to transactions, other events and conditions as if the policy had always been applied.

Change in accounting policy

A change required by a standard or interpretation, or a change that will result in the financial statements providing reliable and more relevant information about the effects of transactions, other events or conditions on the entity’s financial position, financial performance or cash flow.

Initial application

The first-time application of an IFRS or interpretation (including early adoption).

Voluntary changes to accounting policies

Changes to accounting policies that are made voluntarily and are applied retrospectively.

Changes in accounting estimates

Recognizing the effect of changes in accounting estimates prospectively in the period of change (and future periods if the change affects both).

Prospective recognition

Recognizing changes in accounting estimates in profit and loss in the period of change, or in that period and future periods if applicable.

Material prior period error

An error in a prior period that is material and requires retrospective restatement.

Retrospective restatement

Correcting the recognition, measurement and disclosure of amounts of elements of financial statements as if a prior period error had never occurred.

Restatement methods

Restating comparative amounts for the prior periods presented, or restating the opening balances of assets, liabilities and equity for the earliest prior period presented.