Why this is mistaken
Prove each pre-period asset and liability adjustment and its tax effect. The resulting equity amount then ties to the opening balance sheet and statement of changes in equity. An unexplained difference remains an error in the workpaper.
Where to watch
When this mistake may appear
- A transition or correction reaches periods before the earliest comparative year.
Check your work
Your work may contain this mistake if:
- Calculates retained earnings as whatever makes the entry balance.