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How are material prior-period errors in financial statements accounted for when comparative statements are issued?
A. They are corrected by restating comparative amounts for years when errors occurred.
B. They are included in the determination of profit or loss for the current period.
C. Prior-period financial statements are adjusted and reissued.
D. They are charged or credited directly to the closing balance of current-year retained earnings.
Answer: A
Explanation:
All material prior-period errors must be corrected retrospectively in the first set of financial statements issued after their discovery. This may be done by restating the comparative amounts for the prior periods when the error occurred. If the error occurred prior to the first period presented, the opening balances for the first period presented are restated_ A material error is one that could, individually or collectively, affect the decisions of users of the financial statements. However, comparative information should be restated only if practicable.
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C. It displays the item nos with their average quantity where the average quantity is more than double the minimum quantity of that item in the table.
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