Prior-period adjustments are reported on the current year's:
A) income statement.
B) retained earnings statement.
C) balance sheet.
D) footnotes of the financial statements.

Question

Quizplus · Accepted Answer

Prior-period adjustments are corrections made to previous financial statements due to errors, changes in accounting principles, or other reasons. They affect the balance of retained earnings, which is reported on the retained earnings statement. Therefore, the correct answer is B, retained earnings statement.

Prior-Period Adjustments Are Reported on the Current Year's