If a company records a revenue or expense incorrectly, and the error is not corrected until a later period, the balance of Retained earnings is wrong until the error is corrected.

Question

Quizplus · Accepted Answer

Retained earnings represent the accumulated profits or losses of a company over time. If revenue or expense is recorded incorrectly, it affects the company's net income, which in turn affects the balance of retained earnings. Therefore, until the error is corrected, the balance of retained earnings will be inaccurate.

If a Company Records a Revenue or Expense Incorrectly, and the Error