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 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 other answers are correct ways to account for the change

Question

Quizplus · Accepted Answer

When a company changes the method used to compute the allowance for uncollectible accounts receivable, it should apply the new method to all future periods affected by the change. Additionally, the change should be disclosed in the notes to the financial statements, and previously issued financial statements should be adjusted retrospectively to reflect the new method. Therefore, choice D is the correct answer.

If a Company Changes the Method It Uses to Compute