If It Is Found That an Error Had Been Made

question 45

Multiple Choice

If it is found that an error had been made in a prior period.

• A) The error should be rectified by including the item of income or expense in the period in which the error was discovered.
• B) AASB 101 does not cover this concept and so no entry is required.
• C) AASB 108 requires that errors are corrected via an adjustment to opening retained earnings.
• D) Material errors discovered in the current reporting period must be included in that period's income statement, while non-material errors may be corrected with an adjustment to opening retained earnings.
• E) None of the given answers.

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Definitions:

Market Price

The current selling or buying price of a service or asset in the market.

New Equity Issue

The process through which a company raises capital by selling shares of stock to the public or private investors for the first time.

Shares Undervalued

A situation where stock shares are being sold for less than their intrinsic value, often due to market inefficiencies.

Rights Offering

A process where existing shareholders are given the right to buy additional shares at a discount, typically to raise additional capital.