If a Company Changes the Method It Uses to Compute

question 47

Multiple Choice

If a company changes the method it uses to compute the allowance for uncollectible accounts receivable because more recent information has become available,how is this change in method is accounted for?

• A) The change is only reported in the current period in which the change is made
• B) The change is reported in all future periods affected by the change
• C) Previously issued financial statements are not adjusted by the change
• D) All of the above are correct ways to account for the change

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Definitions:

Retail Price

The total cost at which a product or service is sold to the consumer, including any markup for profit.

Olive Tree

A fruit-bearing tree native to the Mediterranean region, valued for its olives and olive oil.

Dollar Markup

The difference between the cost of an item and its selling price expressed in dollars, indicating the gross profit on the item.

Selling Price

The final amount at which a product or service is sold to the consumer.