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Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

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BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
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Why does a company correct errors even after they have counterbalanced?

To determine

Indicate the reason for correcting the errors even though the error is counterbalanced.

Explanation

Counterbalancing error: The error that affects an income statement account and a balance sheet account, and could be automatically corrected in the following period, even if they are not discovered, is referred to as counterbalancing error.

Reason: A company should correct the counterbalancing error by passing a journal entry, if the error is discovered before it is counterbalanced...

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