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A company discovers an error in their prior year's financial statements. This error led to an understatement of net income. How is this correction treated?

A company discovers an error in their prior year's financial statements. This error led to an understatement of net income. How is this correction treated?
A) As an adjustment to current period retained earnings
B) Reported in the current year's income statement as an unusual item
C) As a prior period adjustment, directly adjusting the beginning retained earnings balance.
D) As a change in accounting estimate affecting future periods
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