14.4 Material errors (IAS 8)
　　A.errors discovered during the current period which relate to a prior period may arise through:
　　- mathematical mistakes
　　- mistakes in the application of accounting policies
　　- misinterpretation of facts
　　- oversight
　　- fraud
　　B.adjustment
　　- Most of the time, these errors can be corrected through net profit or loss for the current period.
　　- The amount of the correction of the material error that relates to prior periods should be reported by adjusting the opening balance of related retained earnings.
　　- This treatment means that the financial statements should appear as if the material error had been corrected in the period it was made.
　　C.Disclosure policy
　　1)Nature of the material error
　　2)Amount of the correction for the current period and for each prior period presented.
　　3)Amount of the correction relating to periods prior to those included in the comparative information.
　　4)The fact that comparative information has been restated or that it is impracticable to do so.
　　Example:
　　What is a journal used for?
　　A.To correct errors
　　B.To correct errors and post unusual transactions
　　C.To correct errors and clear suspense account
　　D.To make adjustments to the double entry
　　Answer D:
　　Although A, B and C are correct as far as they go, they donot cover everything.
　　D is the most comprehensive answer.
　　Example:
　　Sales returns of $460 have inadvertently been posted to the purchase returns, although the
　　Correct entry has been made to the accounts receivables control. A suspense account needs to be set for how much?
　　A.$ 460 Debit
　　B.$ 460 Credit
　　C.$ 920 Debit
　　D.$ 920 Credit
　　Answer C
　　The sales returns of $460 have been credited to accounts receivables and also $460 had been credited to purchase returns. Therefore the trial balance needs a debit of 2 x $460 = $920 to balance.