Accounting Treatment
An entity shall correct material prior period errors retrospectively in the first set of financial statements authorized for issue after their discovery by (paragraph 42, IAS 8):
Change in Accounting Estimates
(a) Restating the comparative amounts for the prior period(s) presented in which the error occurred; or
(b) If the error occurred before the earliest prior period presented, restating the opening balances of assets, liabilities, and equity for the earliest prior period presented.
Potential current period errors discovered before the issuance of the financial statements are immediately corrected.
If an accounting error was made in 2018 and the error was discovered in 2019 when the financial statements for 2018 had already been issued, the comparative figures for 2018 shall be restated (as if no errors were committed in 2018) in the presentation of the 2019 financial statements.
If an enterprise committed a material error in 2017 and the error was discovered in 2019 when the financial statements for 2018 had already been issued, the comparative figures for 2018 shall be restated in the presentation of 2019 financial statements. Any effect of the error on the financial information prior to 2018 (in 2017 in this example) shall be considered as an adjustment in the opening balance of 2018 retained earnings or another component of equity. In addition, as required by IAS 1, when retrospective application is necessary, a restated statement of financial position as at January 1, 2018 shall be presented for an entity that applies Full IFRS.
Other than restating the prior period financial statements, an entity shall disclose the following (paragraph 49, IAS 8):
(a) The nature of prior period error;
(b) For each prior period presented, to the extent practicable, the amount of the correction:
1. For each financial statement line item affected; and
2. (If the company is required to present earnings per share information) for basic and diluted earnings per share;
© The amount of the correction at the beginning of the earliest prior period presented; and
(c) If retrospective restatement is impracticable for a particular prior period, the circumstances that led to the existence of that condition and a description of how and from when the error has been corrected.
Illustrative Example
To illustrate accounting for correction of prior period errors, assume the following for Betty Company:
During 2019, Betty Company discovered that some goods sold in 2018 had been erroneously included in inventory at December 31, 2018 at ₱60,000. Betty’s accounting records for 2019 show sales of ₱1,200,000, cost of goods sold of ₱760,000 (including ₱60,000 for the error in opening inventory), expenses (other than cost of goods sold) of ₱240,000 and income taxes of ₱60,000 (which is 30% of ₱200,000).
In 2018, Betty reported the following:
Sales: ₱735,000
Cost of goods sold: ₱500,000
Gross profit: ₱235,000
Selling and administrative expenses: ₱65,000
Profit before income tax: ₱170,000
Income tax expense: ₱51,000
Profit: ₱119,000
The 2018 opening retained earnings was ₱150,000 and closing retained earnings was ₱269,000. Assume that Betty’s income tax rate was 30% for 2019 and 2018. Betty had ₱500,000 of share capital throughout, and no other components of equity except for retained earnings.
In correcting the error in 2018 discovered in 2019, the statement of comprehensive income for the year 2019 with comparative statement for 2018 should report the following
help me to explain this
Answer (2)
Answer:There are many ways to categorize customers, and the "four types" can vary depending on the context and the purpose of the categorization. Here are a few common frameworks: 1. Based on Purchase Behavior: - Loyal Customers: These customers consistently purchase from you and are your most valuable assets. They often have high lifetime value.- Occasional Customers: These customers purchase from you occasionally, perhaps when they need a specific product or service.- New Customers: These customers are just starting to explore your brand and products. They might be attracted by promotions or recommendations.- Lost Customers: These customers used to be loyal or occasional but have stopped purchasing from you. Understanding why they left is crucial for regaining them. 2. Based on Value: - High-Value Customers: These customers generate significant revenue and are often the target of loyalty programs and personalized marketing.- Medium-Value Customers: These customers contribute moderately to your revenue and might be a good target for cross-selling or up-selling.- Low-Value Customers: These customers generate minimal revenue and might not be worth investing in as much as other customer segments.- Potential Customers: These customers haven't purchased yet but show interest in your products or services. They can be targeted with specific marketing campaigns to convert them. 3. Based on Demographics: - Age: Different age groups have different needs and preferences.- Gender: Understanding gender-specific preferences can help tailor marketing efforts.- Location: Customers in different geographical areas might have different needs or buying habits.- Income: Income level can influence purchasing power and product choice. 4. Based on Psychographics: - Lifestyle: Customers with similar lifestyles might be interested in similar products or services.- Values: Customers who value sustainability, for example, might be more likely to purchase eco-friendly products.- Personality: Understanding customer personality traits can help tailor marketing messages and product offerings. Remember: - These are just a few examples, and the specific types of customers you focus on will depend on your business and its goals.- It's important to use a combination of different categorization methods to gain a comprehensive understanding of your customers. By understanding your customers, you can tailor your marketing efforts, product development, and customer service to better meet their needs. This can lead to increased customer satisfaction, loyalty, and ultimately, business success.
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