A client has a calendar year-end.Listed below are four events that occurred after 31 December.Which one of these subsequent events might result in adjustment of the 31 December financial statements?
A) settlement of a litigation for a different amount from that recorded in the accounts
B) adoption of accelerated depreciation methods
C) collection of 90% of the accounts receivable existing at 31 December
D) sale of a major subsidiary

Question

Quizplus · Accepted Answer

Settlement of a litigation for a different amount from that recorded in the accounts is a subsequent event that might result in adjustment of the 31 December financial statements as it affects the accuracy of the financial statements. The settlement amount might differ from the amount recorded initially, leading to changes in the financial statements. The other events above may not result in the adjustment of the 31 December financial statements.

A Client Has a Calendar Year-End