Chapter 17, Problem 8QS

To determine

Introduction:

Adjustment to Financial Statements:

• Financial Statements are to be prepared with the best prudence possible and are to be based on data that is accurate and gives a true and fair view of the financial position of the entity and its’ operations.

• However, it is possible that inadvertently errors and omissions occur and lead to inaccurate financial reporting. These could be errors of omission, duplication or errors of interpretation and principal.

• In the event that an error has been discovered and such error pertains to financial statements of previous years, such that it has an impact on the income reported, in the previous years, the requisite financial rectifications should be carried out and necessary effect must be given to the income statement of the current year.

To Determine:

How the correction of mistake should be reported in the financial Statements.