Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?
A)sale of long-term debt or capital stock
B)loss of a plant as a result of a flood
C)major purchase of a business that is expected to double the sales volume
D)settlement of litigation in excess of the recorded liability

Question

Quizplus · Accepted Answer

The settlement of litigation in excess of the recorded liability would require an adjustment to the financial statements before they could be issued. This is because the financial statements should reflect the most current and accurate information, and the settlement would have a material impact on the company's financial position and results of operations. A, B, and C may also have an impact on the financial statements, but they would not necessarily require an adjustment before the financial statements could be issued.

Which of the Following Material Events Occurring Subsequent to the Balance