For Each of the Following Scenarios, Determine the Effects (If

question 7

Essay

For each of the following scenarios, determine the effects (if any)of the accounting change (correction of error, change in accounting policy, or change in estimate)on the relevant asset or liability, equity, and comprehensive income in the year of change and the prior year. Use the following table for your response.

A. Company A increases the allowance for doubtful accounts (ADA). Using the old estimate, ADA would have been $71,000. The new estimate is $74,000.
B. Company B omitted to record an invoice for a $7,000 sale made on credit at the end of the previous year and incorrectly recorded the sale in the current year. The related inventory sold has been accounted for.
C. Company C changes its revenue recognition policy to a more conservative one. The result is a decrease in prior year revenue of $4,200 and a decrease in current-year revenue of $6,300 relative to the amounts under the old policy.

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Definitions:

Unsupervised

The process or condition of performing or being without direct oversight or control.

Schizophrenia

A chronic and severe mental disorder affecting how a person thinks, feels, and behaves, characterized by delusions, hallucinations, and other cognitive difficulties, leading to impaired functioning.

On Their Own

Refers to the act of being independent or self-sufficient, without needing help from others.

Group-living Arrangement

A residential living situation where individuals live together and share common spaces, often used for therapeutic communities or supportive living.