A prior-period adjustment that corrects income of a prior period requires an entry to:
A) a liability account.
B) an income statement account.
C) retained earnings.
D) an expense account.

Question

Quizplus · Accepted Answer

A prior-period adjustment that corrects income of a prior period affects the retained earnings account, not liability, income statement, or expense accounts. This adjustment reflects a correction of an error made in a previous period and requires an adjustment to the beginning balance of retained earnings for the affected period.

A Prior-Period Adjustment That Corrects Income of a Prior Period