Which of the Following Is a Change in Policy

question 38

Multiple Choice

Which of the following is a change in policy?

• A)A company changes from the gross method to the net method of recording cash discounts.
• B)A change in the terms of a loan from repayment on demand to a fixed repayment date two years after the fiscal year-end.
• C)A contingency for a lawsuit that was evaluated to be likely to lead to an outflow of resources was ultimately resolved against the reporting entity.
• D)A temporary tax difference was treated as permanent tax difference.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales activities over a specified period.

Accounting Break-even

The point at which total revenues exactly equal total expenses, and there is no profit or loss, from an accounting perspective.

Financial Break-even

The point at which total revenue equals total costs and expenses, leaving the company with no net profit or loss.

Variable Cost

Costs that move in correspondence with the quantity of products made or services sold.