At year-end MarisAlbion sent out accounts receivable confirmations. One of the major customers of her client confirmed that they would not be able to pay off the receivable. The client subsequently went bankrupt and an aggrieved shareholder of Marissa's client sued her firm. What type of subsequent event was this?
A) Type 1
B) Type 2
C) Type 1 and 2
D) this was not a subsequent event

Question

Quizplus · Accepted Answer

This is a Type 1 subsequent event, as it provides additional evidence about conditions that existed at the balance sheet date, indicating that the receivable was uncollectible.

At Year-End MarisAlbion Sent Out Accounts Receivable Confirmations