If a firm discovers a self-correcting error in the second year, and the books are still open, it ________.
A) need not correct the error because it will reverse itself at the end of the year
B) should correct beginning retained earnings and any remaining accounts needed to correct the error for both years
C) must recall the previous year's financial statements, correct them, and reissue the financials
D) should only correct the second year's error and leave beginning retained earnings unadjusted

Question

Quizplus · Accepted Answer

The firm should correct beginning retained earnings and any remaining accounts needed to correct the error for both years to ensure accurate financial reporting and compliance with accounting standards.

If a Firm Discovers a Self-Correcting Error in the Second