A correction of errors in prior year financial statements require an adjustment to opening retained earnings.

Question

Quizplus · Accepted Answer

When errors are corrected in prior year financial statements, the adjustment affects the opening retained earnings balance of the current period. This is because the correction of errors in prior years affects the beginning balance of retained earnings, which is carried forward to the current year's financial statements. Therefore, an adjustment is required to accurately reflect the corrected financial statements.

A Correction of Errors in Prior Year Financial Statements Require