Limited access

Upgrade to access all content for this subject

When a company understates its Inventory at the end of a prior reporting period, a prior-period adjustment must be made to the financial statements. Suppose the error is made in 2016, but the error is not discovered until 2017 after the books have been closed.

The entry to correct the error at the beginning of 2017 includes a
Select Option debitcredit
in the Inventory account and a
Select Option debitcredit
in the
Select Option InventoryCost of Goods SoldRetained Earnings
account. (Ignore the income tax effect of the error.)
Select an assignment template