A prior-period adjustment for overstated net income will be:
A) debited to the Retained Earnings account.
B) credited to the Retained Earnings account.
C) shown as a liability on the current year's Balance Sheet.
D) shown as a loss on the current year's Income Statement.

Question

Quizplus · Accepted Answer

A prior-period adjustment for overstated net income is debited to the Retained Earnings account to correct the error and reduce the retained earnings balance.

A Prior-Period Adjustment for Overstated Net Income Will Be