Which of the following subsequent events is most likely to result in an adjustment to a company's financial statements?
A) merger or acquisition activities
B) bankruptcy (due to deteriorating financial condition) of a customer with an outstanding accounts receivable balance
C) issuance of common stock
D) an uninsured loss of inventories due to a fire

Question

Quizplus · Accepted Answer

Bankruptcy of a customer with an outstanding accounts receivable balance directly affects the company's current financial position by reducing the likelihood of collecting the receivable, thus requiring an adjustment to the financial statements to reflect the impaired asset.

Which of the Following Subsequent Events Is Most Likely to Result