If a company makes a prior period adjustment, which of the following describes how it must...

If a company makes a prior period adjustment, which of the following describes how it must be reported?

a. The adjustment is reported in the current period's income statement as a separate item.

b. The adjustment is recorded in retained earnings, and previous years' financial statements presented for comparative purposes are not changed.

c. The adjustment is recorded as a deferred asset or deferred liability and amortized using the straight-line method.

d. The adjustment is recorded in retained earnings, and previous years' financial statements presented for comparative purposes are adjusted.

Expert Solution

Answer:-

●D)The adjustment is recorded in retained earnings, and previous years' financial statements presented for comparative purposes are adjusted.

●Explanation :-

A)not reported in income statement

B)purposes are not changed is wrong it would be adjusted

C)not recorded as deferred asset or liability.

D) correct answer

ekkarill92 answered 2 years ago

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