Which statement is correct about a correction of an error from prior periods?
A)The correct information was available at the time the error was made.
B)The correct information was not available at the time the error was made.
C)One should use hindsight to judge whether there is an accounting error that requires correction.
D)An example of a correction of an error is the difference between the allowance for doubtful accounts and the actual outcome of bad debts.

Question

Quizplus · Accepted Answer

Corrections of errors from prior periods are made when the correct information was available at the time the error was made but was not used or was misinterpreted. This distinguishes true errors from changes in estimates, which occur when new information becomes available.

Which Statement Is Correct About a Correction of an Error