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Change in the percentage applied in the determination of bad debts, resulting from new market research study.

A. Change in an accounting principle
B. Change in an accounting estimate
C. Change in reporting entity
D. Correction of an error"i

User Edwing
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Final answer:

A change in the percentage for determining bad debts due to new market research is a Change in an accounting estimate. Additionally, in the financial market, an increase in the quantity of loans is usually due to either a rise in demand or a rise in supply.

Step-by-step explanation:

The change in the percentage applied in the determination of bad debts due to a new market research study is known as a Change in an accounting estimate. Accounting estimates are adjustments that companies make to their financial statements to reflect expected future realities. When a company changes an accounting estimate, it is acknowledging that the initial figures used may no longer be valid due to new information. An example of this would be if a company originally estimated that 5% of its outstanding receivables would be uncollectible, but new market research indicates a worsening credit environment and the company adjusts this figure to 7%.

Regarding the effect of changes in the financial market on the quantity of loans made and received, an increase in the quantity of loans occurs when there is either a rise in demand for loans or a rise in supply of loanable funds. A rise in demand indicates that more consumers or businesses are seeking loans, while a rise in supply means that lenders have more funds available to offer as loans.

User Eduyayo
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