The correction of a previously undetected error relating to the net income or loss of a prior accounting period is reported as:

Question

Quizplus · Accepted Answer

This is a clear case of a prior period adjustment, which is the correction of an error in the financial statements of a prior accounting period. Prior period adjustments are reported in the current period's financial statements as an adjustment to beginning retained earnings. Choices A and B are not applicable as they do not relate to the correction of an error in a prior period. Choice D is not a recognized term in GAAP or IFRS.

The Correction of a Previously Undetected Error Relating to the Net