Question

Which of the following would appear as a prior period adjustment?

a. loss resulting from the sale of fixed assets
b. difference between the actual and estimated uncollectible accounts receivable
c. error in the computation of depreciation expense in the preceding year
d. loss from the restructuring of assets

Answer 1

A prior period adjustment is an accounting correction for errors or omissions from a previous reporting period. The error in the computation of depreciation expense in the preceding year would appear as a prior period adjustment.

Step-by-step explanation:

A prior period adjustment is an accounting correction made to the financial statements of a company for errors or omissions from a previous reporting period. It is typically disclosed separately in the financial statements and can have a significant impact on the reported financial results. Out of the options given, the error in the computation of depreciation expense in the preceding year would appear as a prior period adjustment.