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The following are requirements for the correction of an accounting error:
- Prepare a journal entry and then correct the error.
- Report a prior period adjustment to the starting balance in retained earnings for the earliest year thats affected.
An unintentional inaccuracy in an accounting entry is referred to as an accounting error. The error or mistake is frequently corrected right away when discovered. If the issue cannot be resolved right away, an inquiry into the error is carried out.
Accounting mistakes are blunders that are frequently committed when entering or submitting accounting entries. These differences are typically inadvertent and not the result of fraud.
The capitalization of $400,000 spent on routine equipment repairs contains an accounting mistake. This mistake has to be corrected because it causes the following issues:
- incorrectly reporting income
- incorrect categorisation of cash flows
- incorrectly reporting expenses
- a mismatch between income and expenses.
To know more about accounting error: https://brainly.com/question/26990784
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