Which of the Following Would Be Accounted for as a Change

question 148

Multiple Choice

Which of the following would be accounted for as a change in accounting estimate? (More than one answer may be correct. )

• A)A furniture maker decreases bad debts expense from 3% to 2% of credit sales.
• B)A manufacturer determines that credit losses are becoming material due to deteriorating economic conditions.As a result,it decides to set up an allowance for doubtful accounts at 5% of amounts over 90 days.
• C)A parking service estimates bad debts to be 10% of the value of parking violations issued.In the current year,it changes to estimating the allowance for bad debts to be equal to 20% of accounts 30 to 90 days and 50% of accounts over 90 days.
• D)A shipbuilder changes its revenue recognition policy from the point of receipt by the customer to when the ship leaves the factory shipyard.This change results from a change in shipping policy from f.o.b.destination to f.o.b.shipping point.(Recall from introductory accounting that f.o.b.means "free on board," and it refers to the point at which ownership transfers from seller to buyer. )
• E)An electronics retailer has never accrued for warranties or product guarantees.A new consumer protection law comes into effect,giving buyers of electronic products a guarantee against defects for 180 days after purchase and the ability to return defective products to the retailer.

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Definitions:

Precambrian

A very long interval of geologic time, from the formation of the solid earth to the beginning of the Paleozoic; it is equivalent to 90% of geologic time.

Precambrian

Referring to the eon that constitutes the earliest part of Earth's history, which ended approximately 542 million years ago.

Geologic Time

The exceptionally long period of time dealt with by geology; the time extending from the formation of Earth to the beginning of written history.

Precambrian

The long span of time before the Phanerozoic Eon, making up around 88% of Earth's history, marked by the formation of the earth and early life forms.