Error Corrections Which Involve Restatement of Prior Period Income Must

question 123

Multiple Choice

Error corrections which involve restatement of prior period income must be reported

• A)in a separate account within the equity section of the balance sheet.
• B)within "unrestricted retained earnings" on the balance sheet, with footnote disclosure to describe the appropriation.
• C)as a prior period adjustment on the statement of changes in retained earnings.
• D)only within the footnotes accompanying the financial statements.

---

Definitions:

Marginal Cost

The hike in aggregate cost linked with the fabrication of one extra unit of a product or service.

Marginal Revenue

The additional income received from selling one more unit of a good or service, critical in determining optimal production levels.

Average Variable Cost

The total variable cost divided by the quantity of output produced, indicating the variable cost of producing each unit.

Total Fixed Cost

Total Fixed Cost is the sum of all costs required to produce a product or service that does not change with the volume of output, such as rent, salaries, and equipment maintenance.