For Which of the Following Changes Would Retained Earnings Be

question 44

Multiple Choice

For which of the following changes would retained earnings be restated?

• A)Changing from FIFO to average cost inventory valuation.
• B)Lengthening the estimated useful life of an asset.
• C)Changing the percentages used in calculating the allowance for doubtful accounts.
• D)Changing the structure of the bonus plan of senior management.

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Definitions:

Cost Allocated

The amount of indirect costs assigned to cost objects based on certain criteria or cost drivers.

Assembly Department

A section within a manufacturing process where pieces are put together to form a component or a finished product.

Fixed Overhead Rate

A consistent charge that does not fluctuate with the level of output or activity in a given period, used to allocate fixed costs to units of output.

Absorption Costing

An accounting method that includes all manufacturing costs (direct materials, direct labor, and overhead) in the cost of a product.