prior period adjustment

prior period adjustment definition - business

prior period adjustment

Correction of a material mistake in reported income in an earlier financial statement. Although prior period adjustments affect retained earnings, they are not used to alter income in the current period. Also called retroactive adjustment.

The American Heritage® Dictionary of Business Terms Copyright © 2009 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

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