Companies report prior period adjustments,net of any income tax effects in the:

A) Statement of cash flows.
B) Balance sheet.
C) Statement of retained earnings.
D) Income statement.
E) No disclosure is required.

Question

Matti Heiden · Accepted Answer

Final Answer : C, Explanation :  Prior period adjustments are reported in the statement of retained earnings to reflect the correction of errors in previous periods impacting the balance of retained earnings. This adjustment is not reported in the income statement because it is not related to the current period's income, nor in the balance sheet because it is not related to the current balance of assets, liabilities, or equity. The statement of cash flows only reports cash flows related to the current period. Therefore, the best choice is option C.

Companies report prior period adjustments,net of any income tax effects in the:

A) Statement of cash flows.
B) Balance sheet.
C) Statement of retained earnings.
D) Income statement.
E) No disclosure is required.

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Learning Objectives

Learning Objectives

Related questions

Companies report prior period adjustments,net of any income tax effects in the:A) Statement of cash flows.B) Balance sheet.C) Statement of retained earnings.D) Income statement.E) No disclosure is required.

Definitions

Learning Objectives

Learning Objectives

Related questions

Companies report prior period adjustments,net of any income tax effects in the:

A) Statement of cash flows.
B) Balance sheet.
C) Statement of retained earnings.
D) Income statement.
E) No disclosure is required.