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In this video, the tutorial explains how to account for a change in accounting principle, specifically when a company switches from one GAAP method to another. For instance, if a company decides to change from the percentage of completion method to the completed contract method for construction contracts, this constitutes a change in accounting principle. The change should be accounted for retrospectively, meaning prior financial statements must be revised, along with an adjustment to retained earnings. This process is followed unless it is impracticable. The video also highlights the need for disclosures regarding the nature of the change and the reason for the shift, such as moving from the weighted average cost method to FIFO in inventory accounting.