On January 1, 2017, Robin Ltd

question 1

Multiple Choice

On January 1, 2017, Robin Ltd.changed its inventory valuation method from weighted-average cost to FIFO for financial statement and income tax purposes, to make their reporting as reliable and more relevant.The change resulted in a $600,000 increase in the beginning inventory at January 1, 2017.Assume a 25% income tax rate.The cumulative effect of this accounting change reported for the year ended December 31, 2017 is

• A)$0.
• B)$150,000.
• C)$450,000.
• D)$600,000.

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Definitions:

Sales Tax Payable

A liability account in a company's financial statements, representing sales tax collected from customers but not yet remitted to the government.

Sale

The exchange of a product or service for money, constituting the main operational activity for most businesses.

Liability Account

An accounting record that holds the amounts owed by a company to creditors, suppliers, or lenders.

Terms

Conditions under which a sale is made, including payment timeframe, discounts, and penalties for late payment.