The Cumulative Effect of a Previously Recorded Accounting Error Is

question 52

True/False

The cumulative effect of a previously recorded accounting error is known as a prior-period adjustment.

---

Definitions:

Non-interest Bearing Notes

A type of debt instrument that does not accrue interest over time, requiring the borrower to repay only the principal amount.

Historical Cost

The original monetary value of an asset or investment, not adjusted for inflation or changes in market value.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return, used in discounting and investment appraisal.

Maturity Value

The amount due to be paid at the end of a financial instrument's term, including both the principal and any accrued interest.