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PRIOR PERIOD ADJUSTMENTS

6 May, 2015 - 17:10

When a material error is discovered in the period it occurred, the following procedures should be followed: 1) post the error in a journal entry, 2) post the correct journal entry, and 3) determine the debit and credit adjustments needed to bring the correct balance to accounts. When material errors are not discovered in the same period they have occurred, an adjustment must be made to the retained earnings balance.