Overview
Accounting principles, methods, and estimates, whether mandated or self-chosen, establish the foundation for subsequent accounting activities, dictating the recognition and measurement of assets, liabilities, revenues, expenses, gains, and losses. When applied consistently, these principles and methods bring structure to financial statements and instill confidence in users as they interpret the financial data.
Topic 250, Accounting Changes and Error Corrections, does not specify particular accounting principles, methods, or estimates, but it offers guidance on the appropriate times and methods for changing them. Additionally, if an entity makes errors in applying its accounting principles or methods or in estimating, Topic 250 outlines how to correct these mistakes. Thus, Topic 250 serves as a standard for all other accounting standards.
This course has been updated to reflect updates to ASC 250 as a result of ASU 2023-06.