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Concept Map Error Correction

The document discusses different types of accounting errors that can occur in financial statements including current period errors and prior period errors. Current period errors affect only the financial statements for the current period and are corrected through reclassifying or adjusting entries. Prior period errors affect the financial statements of the period in which the error occurred and subsequent periods, requiring correction of retained earnings. Examples of errors provided include inventory misstatements, prepaid and accrued expenses, and depreciation calculations.

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Lika Asupan
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267 views

Concept Map Error Correction

The document discusses different types of accounting errors that can occur in financial statements including current period errors and prior period errors. Current period errors affect only the financial statements for the current period and are corrected through reclassifying or adjusting entries. Prior period errors affect the financial statements of the period in which the error occurred and subsequent periods, requiring correction of retained earnings. Examples of errors provided include inventory misstatements, prepaid and accrued expenses, and depreciation calculations.

Uploaded by

Lika Asupan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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ERROR

CORRECTION

ASUPAN, NHANINA B.

Curre
nt
Period
Errors

STATEMENT OF
FINANCIAL
POSITION (SFP)
ERRORS
INCOME
STATEMENT (IS)
ERRORS

AC 510 (TTH 10:30 AM 12:00NN)

COMBINED SFP
AND IS ERRORS

Reclassifying
entry
Reclassifying
entry
Books not yet
closed

STATEMENT OF
FINANCIAL
POSITION (SFP)
ERRORS

Books
closed

Adjusting entry
Adjust to Retained
Earnings

Reclassifying
entry
IS for two successive periods are incorrect

INCOME STATEMENT
(IS) ERRORS

Effects

SFP at the end of the 1st period is incorrect


SFP at the end of the 2nd period is correct

Prior
Period
Errors

Inventory, including purchases and


sales

COUNTERBALANCING
ERRORS

Prepaid expense

Normally include
misstatement of

COMBINED
STATEMENT OF
FINANCIAL
POSITION (SFP) AND
INCOME STATEMENT
(IS) ERRORS

Accrued expense
Deferred income
Accrued income

Effects
NONCOUNTERBALANC
ING ERRORS

IS of the period in which the error is


committed is incorrect
SFP of the year of error and succeeding
years are incorrect until error is corrected
Depreciation

Examples
Doubtful Accounts

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