A Retailer Increases Bad Debts Expense from 2

question 28

Multiple Choice

A retailer increases bad debts expense from 2.5% to 3% of credit sales. Given this information, which of the following statements is correct?

• A)The net income of prior years is overstated and a retrospective correction should be made.
• B)This is a change in estimate and should be treated prospectively.
• C)This is a change in accounting policy and treatment is retrospective.
• D)This is a correction of an error and a retrospective correction should be made.

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Definitions:

Special Expertise

A specific skill set or knowledge that differentiates an individual or organization in a particular area.

Systems/Contingency

A theory or approach that emphasizes the need to adapt management strategies or organizational structures based on the current environment and specific situations.

Communication

The process of exchanging information or expressing ideas and feelings through verbal or non-verbal means.

Systems/Contingency Manager

A professional responsible for adapting management strategies to address and anticipate various situations or changes within an organization, ensuring flexibility and effectiveness.