Which of the Following Statements Is TRUE About Prior Period

question 94

Multiple Choice

Which of the following statements is TRUE about prior period adjustments?

• A) Prior period adjustments require a complete restatement of prior year financial reports.
• B) Prior period adjustments are shown on the statement of retained earnings as corrections to the beginning balance.
• C) Prior period adjustments affect balance sheet accounts only, and must be included on single-step income statements.
• D) Prior period adjustments must be included as a separate line item on a multi-step income statement.

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Definitions:

Capital Account Deficit

Occurs when a country's total payments from its capital account transactions exceed its total receipts.

Goods Imports

The act of bringing in goods and services from a foreign country for trade or sale within a domestic market.

Net Investment Income

The profit from investments after deducting all related expenses, such as interest payments and fees.

Purchases of Assets

The acquisition of assets, such as property, equipment, or securities, by a company or individual as investments or for production purposes.