Which of the following statements best describes a subsequent event?
A) A subsequent event affects only subsequent reporting periods.
B) A subsequent event is,in some cases,reflected in the statements of the preceding period.
C) A subsequent event may occur any time after financial statements are issued.
D) A subsequent event is not covered by the independent auditor's report.

Question

Quizplus · Accepted Answer

A subsequent event is an event that occurs after the balance sheet date but before the financial statements are issued. If the subsequent event provides additional evidence about a condition that existed as of the balance sheet date, then the financial statements should be adjusted to reflect this new information. If the subsequent event does not relate to a condition that existed at the balance sheet date, then it should be disclosed in the notes to the financial statements. In some cases, a subsequent event may require restatement of the financial statements for the preceding period. Therefore, option B is the best choice, as a subsequent event may sometimes affect the financial statements of the preceding period.

Which of the Following Statements Best Describes a Subsequent Event