Prior Period Adjustments

question 137

Multiple Choice

Prior period adjustments:

• A)always increase the beginning balance of retained earnings.
• B)are shown on the statement of retained earnings as corrections to the beginning balance.
• C)affect balance sheet accounts only, and must be included on single-step income statements.
• D)must be included as a separate line item on a multi-step income statement.

Determine equivalent units for materials and conversion costs.

Understand the first-in, first-out (FIFO) method in process costing.

Calculate equivalent units of production for conversion costs under FIFO.

Recognize how production costs impact the cost per equivalent unit under different costing methods.

---

Definitions:

Money Supply

The combined economic financial resources at a given time in an economy.

Interest Rate

The part of a loan that is added as interest for the borrower, normally expressed as an annual percentage of the existing loan balance.

Reserve Ratio

The reserve ratio is the fraction of total deposits that a bank is required to hold in reserve and not loan out, acting as a regulatory tool to ensure the stability of the banking system.

Bank Reserves

Funds that banks hold to meet immediate withdrawal demands and regulatory requirements.