Items Reported as Prior-Period Adjustments

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Question

Items reported as prior-period adjustments

Answers

A. do not include the effect of a mistake in the application of accounting principles as this is accounted for as a change in accounting principle rather than a prior- period adjustment.

B. do not affect the presentation of prior-period comparative financial statements.

C. are reflected as adjustments of the opening balance of the retained earnings of the earliest period presented.

D. none of these answers.

E. do not require further disclosure in the body of financial statements. C

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Explanations

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A. B. C. D. E.

Explanation

Prior-period adjustments are made for the correction of errors. All the effects of errors on prior-period financial statements are reported as adjustments to beginning retained earnings for the earliest period presented in the retained earnings statement.

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