Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Retained Earnings: Prior Period Adjustments

Financial Accounting

12. Stockholders' Equity

Retained Earnings: Prior Period Adjustments

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Multiple Choice

Prior period adjustments are reported in the:

Notes to the Financial Statements only

Income Statement

Statement of Retained Earnings

Statement of Cash Flows

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Verified step by step guidance

Understand the concept of prior period adjustments: These are corrections of errors or changes in accounting principles that affect the financial statements of previous periods.

Recognize where prior period adjustments are reported: They are not reported in the Income Statement, Statement of Cash Flows, or solely in the Notes to the Financial Statements. Instead, they are directly adjusted in the Statement of Retained Earnings.

Learn the purpose of the Statement of Retained Earnings: This statement shows the changes in retained earnings over a period, including prior period adjustments, net income, and dividends.

Identify how prior period adjustments are presented: They are typically shown as an adjustment to the opening balance of retained earnings in the Statement of Retained Earnings.

Review the importance of disclosure: While prior period adjustments are reported in the Statement of Retained Earnings, additional details about the nature and impact of the adjustments are often disclosed in the Notes to the Financial Statements for transparency.