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متابعة

During the current year, Company discovered it had overstated sales in the prior year. How should Co. handle this issue? (Select from the option)

Company is using IFRS method of accounting

 

A) Spread the adjustment over current and future periods.

B) Adjust current sales for the entire adjustment.

C) Spread the adjustment over future periods.

D) Restate the prior year financial statements presented for comparative purposes.

 

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تم إضافة السؤال من قبل Shameer Nazir Madari , Assistant Finance Manager , METAL AND RECYCLING COMPANY K.S.C. (PUBLIC)
تاريخ النشر: 2016/07/27
Khaled Al Hammadi
من قبل Khaled Al Hammadi , Group Financial Manager , Ultra Mediacl Group

D) Restate the prior year financial statements presented for comparative purposes

Khawaja Haider Ali
من قبل Khawaja Haider Ali , VAT Specialist Higher Executive Officer , HM Revenue & Customes HMRC

It should be D, spreading the previous years sales adjustments to future periods is like doing the same mistake again. 

 

 

 

Zaheer uddin Raja
من قبل Zaheer uddin Raja , Accounts Supervisor , Pakistan International Airlines

D) is correct answer. Only prior year's comparative figures should be corrected / restated.

SYED BADRUDDIN
من قبل SYED BADRUDDIN , Showroom Manager , Al-Ahmary Est.

B) Adjust current sales for the entire adjustment.

Naji Mohamed
من قبل Naji Mohamed , Audit Manager , Apex chartered Accountants

 

Corrections of errors in prior period financial statements that are related to items of profit or loss in prior periods are accounted for as prior-period adjustments, and they are reported on the statement of retained earnings as an adjustment to beginning retained earnings.

This means that the journal entry will consist of a Dr/Cr to Retained Earnings and an opposite Dr/Cr to the asset or liability account that was affected by the error.

Muhammad Yasir Faraz
من قبل Muhammad Yasir Faraz , Manager Special Processes/ R & D Engineer , Givori

Answer A; Spread the adjustment over current and future periods.

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