Correction of a material error occurring in prior periods is reported as
A)an adjustment of earnings of the current period, only.
B)a retroactive restatement of prior years earnings, only.
C)a retroactive restatement of prior years earnings and an adjustment to the beginning balance of retained earnings for the current period.
D)an adjustment of earnings of the current and future periods.
E)an adjustment of earnings of the current period, and an adjustment to the ending balance of retained earnings for the current period.

Question

Quizplus · Accepted Answer

Correction of a material error occurring in prior periods is reported by making a retroactive restatement of prior years' earnings and an adjustment to the beginning balance of retained earnings for the current period. This is in accordance with Generally Accepted Accounting Principles (GAAP) as it provides investors and stakeholders with accurate financial information for decision-making purposes.

Correction of a Material Error Occurring in Prior Periods Is