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) Collection of 90% of the accounts receivable existing at 31 December
C) Adoption of accelerated depreciation methods
D) Sale of a major subsidiary

Question

Quizplus · Accepted Answer

The settlement of a litigation for a different amount from that recorded in the accounts could result in adjustment of the 31 December financial statements as it may affect the accuracy of the recorded amount for the related account. The other options do not necessarily require adjustment of the financial statements as they relate to events that occurred after the year-end and may not affect the financial position of the company as at 31 December.

A Client Has a Calendar Year- End