the income statement error is discovered in the year of error, what action is to be done by the entity? a. Reclassify the item to its proper nominal account. b. Reclassify the item to real account. c. Adjust the effect to the retaine

the income statement error is discovered in the year of error, what action is to be done by the entity? a. Reclassify the item to its proper nominal account. b. Reclassify the item to real account. c. Adjust the effect to the retaine

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

If the income statement error is discovered in the year of error, what action is to be done by the entity?

a. Reclassify the item to its proper nominal account.

b. Reclassify the item to real account.

c. Adjust the effect to the retained earnings account.

d. Ignore the error.

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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