On July 1 20X0 CriCo takers out a 10 10000 note payable that

On July 1, 20X0, CriCo takers out a 10%, $10,000 note payable that is due on July 1, 20X1. No interest is accrued at year-end 20X0. If the error is not discovered until July 1, 20X1....

(a) it will require a prior period adjustment

(b) it will require a current period adjustment

(c) it will require both a and b

(d) it will require no correction

Solution

Prior Period Item: \"It can be defined as income or expense which arise in current period as a result of error or ommission of transactions in the preparation of financial statements of one or more prior periods\".