BUSINESS ADMINISTRATION
FINANCIAL ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The nature of the event and an estimate of the financial effect (or a statement that such an estimate cannot be made)
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The nature of the event only
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An estimate of the financial effect (or a statement that such an estimate cannot be made) only
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No disclosure required
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Detailed explanation-1: -Non-adjusting events are events occurring after the reporting date that do NOT provide evidence of conditions that existed at the end of the reporting period.
Detailed explanation-2: -Adjusting event is the event that arose after the end of the reporting period, but provides further evidence of conditions that existed at the end of the reporting period. Accounting treatment: financial statements should be adjusted for adjusting events.
Detailed explanation-3: -An example of a non-adjusting event after the reporting period is a decline in fair value of investments between the end of the reporting period and the date when the financial statements are authorised for issue.
Detailed explanation-4: -What is a Subsequent Event? A subsequent event is an event that occurs after a reporting period, but before the financial statements for that period have been issued or are available to be issued. Depending on the situation, such events may or may not require disclosure in an organization’s financial statements.
Detailed explanation-5: -Which of the following events after the reporting period would require adjustment in an entity’s financial statements? Bankruptcy of a customer, which occurs after the end of the reporting period and before the issuance of the statements, resulting in the loss of a trade receivable account.