U.S.GAAP and IFRS require firms to account for correction of errors, regardless of whether they are material or not, by retrospectively restating net income of prior periods and adjusting the beginning balance in Retained Earnings for the current period.

Question

Quizplus · Accepted Answer

Both U.S. GAAP and IFRS require firms to correct material errors by retrospectively restating prior period financial statements. If an error is immaterial, it does not require retrospective restatement.

USGAAP and IFRS Require Firms to Account for Correction of Errors