Western Governors University (WGU) ACCT3650 D105 Intermediate Accounting III Practice Exam

Question: 1 / 400

Counterbalancing errors are typically offset or corrected over how many periods?

One period

Two periods

Counterbalancing errors refer to mistakes in accounting that can be corrected by the effects of subsequent transactions over a span of periods. The characteristic feature of these errors is that they are typically offset after two accounting periods.

In the context of accounting, when an error is made in one period, its impact can often reverse itself or be balanced out in subsequent periods. For example, if an expense was understated in the first period, it might correctly reflect in the second period due to appropriate recording. Thus, the error is effectively “counterbalanced” over these two periods, allowing the financial statements to be adjusted appropriately over that timeframe.

This understanding of counterbalancing errors helps accounting professionals determine when and how to make corrections in their reporting practices, ensuring financial statements accurately reflect the financial position of an entity.

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Three periods

Indefinitely

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