Prior period adjustments are shown as an adjustment to the beginning balance of Retained earnings, as reported on the statement of retained earnings.

Question

Quizplus · Accepted Answer

Prior period adjustments are corrections made to errors in the financial statements of previous periods. They are accounted for by adjusting the beginning balance of Retained Earnings in the current period's financial statements. Therefore, the statement "Prior period adjustments are shown as an adjustment to the beginning balance of Retained earnings, as reported on the statement of retained earnings" is true.

Prior Period Adjustments Are Shown as an Adjustment to the Beginning