When a Material Error Is Discovered in Prior Financial Statements

question 48

Multiple Choice

When a material error is discovered in prior financial statements:

• A) prior financial statements are restated to their correct amounts.
• B) assets and liabilities in the current period are restated to their appropriate levels.
• C) prior income effects are adjusted to the current period's beginning balance of retained earnings.
• D) all of these answer choices are correct.

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