A Material Prior Period Error in Year Ending 2012 Was

question 39

Multiple Choice

A material prior period error in year ending 2012 was subsequently discovered in 2013.To comply with IAS 8 Accounting Policies,Changes in Accounting Estimates and Errors an entity should:

• A)reissue the 2012 financial statements with the error corrected.
• B)make a retrospective adjustment in 2012.
• C)make a retrospective adjustment in 2013.
• D)make a prospective adjustment in 2012.

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Definitions:

Quantity Variance

The difference between the actual quantity of materials or labor used in a process and the expected amount, which affects overall production costs.

Direct Materials

Raw materials that are directly traceable to the production of a specific good or service and are a significant portion of the production cost.

Standard Quantity

The expected amount of materials or inputs required to produce a unit of product under normal operating conditions.

Direct Materials Quantity Variance

The variance between the real amount of direct materials consumed during manufacturing and the anticipated standard amount.