Which of the following is an example of a correction of an error in previously issued financial statements?

The adjustment regarding the change to compensation expense for bonuses earned in the prior period that are paid in the subsequent period exemplifies a correction of an error in previously issued financial statements because it addresses an error related to the timing of recognizing expenses. This correction is necessary when previous financial statements did not accurately reflect incurred expenses, leading to an understatement or overstatement of net income in those periods.

In this scenario, the bonuses, although paid in the subsequent period, relate to performance in the prior period, meaning that an adjustment must be made to reflect that expense in the correct accounting period. This adjustment aligns the financial statements with the accrual basis of accounting, where expenses should be recognized when they are incurred, regardless of when they are paid. As a result, it rectifies the prior misstatement, thus qualifying as a correction of an error.

The other scenarios do not fit the definition of correcting an error in previously issued financial statements. Revising sales revenue from previous estimates may involve adjustments but does not specifically address an accounting error that needs to be corrected. Adjusting inventory values due to overstocking or recalculating interest expense can indicate operational changes or accounting policy revisions but are not directly related to correcting inaccuracies in past financial statements.