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.