The correction of an error in the financial statements of a prior period should be reflected, net of applicable income taxes, in the current
A) income statement after income from continuing operations and before extraordinary items.
B) income statement after income from continuing operations and after extraordinary items.
C) retained earnings statement after net income but before dividends.
D) retained earning statement as an adjustment of the opening balance.

Question

Quizplus · Accepted Answer

The correction of an error in the financial statements of a prior period is typically reflected as an adjustment to the opening balance of retained earnings. This approach corrects the error retrospectively without distorting the current period's income statement.

The Correction of an Error in the Financial Statements of a Prior