State the primary category of prior period adjustments and indicate how they are reported in the financial statements?

Is the answer to this question prepaid expenses, accureed revenues and accrued expenses.

Prior year adjustment is recorded when we discover an error in the previous year. For example, suppose that we forgot to record depreciation expense in the last year. Accordingly, we should adjust the beginning retained earnings for this year by the amount of depreciation expense. So the entry will be as follows:
DR. Prior year adjustment (EUITY ACCOUNT THAT WIL BE REDUCED FROM BEGINNING RETAINED EARNINGS)
CR. Accumulated depreciation