Which of the following situations would require adjustment to or disclosure in the financial statements?
A)A merger discussion.
B)The application for a patent on a new production process.
C)Discussions with a customer that could lead to a 40 percent increase in the entity's sales if agreement is successful.
D)The bankruptcy of a customer who regularly purchased 30 percent of the company's output.

Question

Quizplus · Accepted Answer

The bankruptcy of a major customer can have a significant impact on an entity's financial performance, and is therefore considered material information that requires disclosure in the financial statements or adjustment to the financial figures.

Which of the Following Situations Would Require Adjustment to or Disclosure