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How is it treated in the financial statements
Prior period adjustemsts are the transaction which came into notice after preparation of financial statements hence they are adjusted in next years financial statements.
Prior period adjustments are changes made to revenues and expenses that are applicable to the financial statement of a previous period. These adjustments are normally made to correct mistakes or collection of unsettled bills. Generally, if you have closed and filed tax returns for a period, any Prior Period adjustments are recorded in the current year as "Non-Operating Income/Expenses
Prior period adjustments are the revenue items pertaining to previous periods arising due to errors and ommissions in the proir periods.Adjustments due to under/over estimations will not amount to errors/ommissions.
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