CAF-1 · Chapter 8 · Question 9 of 15
When an entity discovers a material error from a prior period, how is the correction presented in the statement of changes in equity?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) As an adjustment to the opening balance of retained earnings for the earliest period presented.
Explanation
The effects of retrospective restatement for prior period errors must be shown as an adjustment to the opening balance of retained earnings (or other relevant equity component) for the earliest period presented.
More Statement of Changes in Equity MCQs
- Q11In the statement of changes in equity, what is the effect of transferring Rs. 20 million from retained earnings to a general reserve?
- Q12A company issues 1 million ordinary shares of Rs. 10 each at a price of Rs. 15 per share. How is the Rs. 5 per share excess recorded?
- Q13Which of the following is an example of an item that is recognized in 'Other Comprehensive Income' and subsequently appears in the…
- Q14Which of the following statements about irredeemable preference shares is true in the context of equity?
- Q15Transaction costs directly related to the issuance of new shares should be: