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 which is expected to double the sales volume.
D)Settlement of litigation in excess of the recorded liability.

Question

Quizplus · Accepted Answer

Settlement of litigation in excess of the recorded liability would require an adjustment to the financial statements as it impacts the liability and can result in a material change to the financial statements. Choices A, B, and C are not material events that would require adjustments to the financial statements before they could be issued.

Which of the Following Material Events Occurring Subsequent to the Balance