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How do firms record​ prior-period adjustments? A. ​Prior-period adjustments are reported as adjustments to net income...

How do firms record​ prior-period adjustments?

A. ​Prior-period adjustments are reported as adjustments to net income after taxes. If comparative statements are presented and the error is determined within the​ three-year income statement reporting​ period, the prior statements can not be restated.

B. ​Prior-period adjustments are reported as adjustments to opening retained​ earnings, after taxes. The income​ and/or expenses of the current period can be changed by economic events and transactions that occurred in prior accounting periods.

C. ​Prior-period adjustments are reported as adjustments to net​ income, net of tax. If comparative statements are presented and the error is determined within the​ three-year income statement reporting​ period, the prior statements can be retroactively restated. The assets of the current period can also be changed by economic events and transactions that occurred in prior accounting periods.

D. ​Prior-period adjustments are reported as adjustments to opening retained​ earnings, net of tax. If comparative statements are presented and the error is determined within the​ three-year income statement reporting​ period, the prior statements can be retroactively restated. In all​ cases, the income of the current period cannot be changed by economic events and transactions that occurred in prior accounting periods.

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ekkarill92 answered 1 year ago
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