An item that should be reported as a prior period adjustment is the:

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A prior period adjustment relates to an error in the financial statements of a prior period. Correction of an error in depreciation from last year is a prior period adjustment because it relates to an error in the financial statements of the previous year. Option B is not a prior period adjustment because it relates to a tax audit that happened after the end of the prior period. Option C is not a prior period adjustment because it relates to a previously written-off amount that was not recognized as an error in the prior period. Option D is not a prior period adjustment because it relates to the collection of a note receivable that was due in the prior period, but was not recognized as an error in the prior period financial statements.

An Item That Should Be Reported as a Prior Period