Which of the following post-balance-sheet events would require adjustment of the accounts before issuance of the financial statements?
A) Loss on a lawsuit, the outcome of which was deemed uncertain at year end
B) Loss of plant as a result of fire
C) Changes in the quoted market prices of securities held as an investment
D) Loss on an uncollectible account receivable resulting from a customer's major flood loss

Question

Quizplus · Accepted Answer

Events that provide additional evidence about conditions that existed at the balance sheet date, such as a loss on a lawsuit where the outcome was uncertain at year-end, require adjustment of the accounts before the issuance of financial statements. This is because they affect the estimates or conditions at the balance sheet date.

Which of the Following Post-Balance-Sheet Events Would Require Adjustment of the Accounts