Prior Period Adjustments ________

question 51

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) can be ignored because the financial statements have already been issued
• D) must be recorded in the period in which the error occurred

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Definitions:

Proceeds

The total amount of money received from a transaction before any deductions are made for costs or expenses.

Interest-Bearing

Referring to debt securities or loans that accrue interest over time, payable to the holder or lender.

Note Payable

A written promise to pay a specified amount of money, usually with interest, at a designated future date.

Withheld

Refers to a portion of an employee's wages not paid out directly to them but instead held back for purposes such as tax payments.