The Correction of an Error in the Financial Statements of a Prior

question 108

Multiple Choice

The correction of an error in the financial statements of a prior period should be reflected, net of applicable income taxes, in the current

• A) income statement after income from continuing operations and before extraordinary items.
• B) income statement after income from continuing operations and after extraordinary items.
• C) retained earnings statement after net income but before dividends.
• D) retained earning statement as an adjustment of the opening balance.

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Definitions:

Reserve Requirement

A regulation set by central banks that determines the minimum amount of reserves a bank must hold against deposits, influencing the bank's capacity to lend.

Fed

Short for the Federal Reserve System, which is the central banking system of the United States responsible for setting monetary policy.

Federal Reserve

The central banking system of the United States, which regulates the U.S. monetary and financial system.

Clearing of Checks

The process by which banks exchange checks or drafts drawn on each other and settle the differences to facilitate the actual transaction the check represents.