Material Income Statement Errors That Occur in the Current Year

question 82

Multiple Choice

Material income statement errors that occur in the current year and do not affect the balance sheet ________.

• A) require adjustment to retained earnings
• B) affect future years retained earnings
• C) must be corrected
• D) affect the statement of cash flows in prior years

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Definitions:

Preconventional

The first level in Kohlberg's stages of moral development, where moral reasoning is based primarily on perceived consequences of actions and obedience to authority.

Level

A specific height or degree of advancement or progress in a sequence or hierarchy.

Morality

Principles concerning the distinction between right and wrong or good and bad behavior.

Punished

The infliction or imposition of a penalty as retribution for an offense or undesirable behavior.