A Retailer Increases Bad Debts Expense from 2

A retailer increases bad debts expense from 2.5% to 3% of credit sales. Given this information, which of the following statements is correct?

A) The net income of prior years is overstated and a retrospective correction should be made.
B) This is a change in estimate and should be treated prospectively.
C) This is a change in accounting policy and treatment is retrospective.
D) This is a correction of an error and a retrospective correction should be made.

Correct Answer:

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