why correction of understatement of net income in prior period we all always add to it the Retained earnings, January 1, as reported?

Retained Earnings Statement Prior Period Adjustments W1,050,000 Chol Ltd. Retained Earnings Statement For the Year Ended December 31, 2022 Retained earnings, January 1, as reported Correction for understatement of net income in prior period (inventory error) Retained earnings, January 1, as adjusted Add: Net income Less: Cash dividends w 100,000 Share dividends 200,000 Retained earnings, December 31 50,000 1,100,000 360.000 1,460,000 300,000 W 1,160,000 ILLUSTRATION 4.20 Before issuing the report for the year ended December 31, 2022, you discover a W50,000 error (net of tax) that caused 2021 inventory to be overstated (overstated inventory caused COGS to be lower and thus net income to be higher in 2021)