Which of the following subsequent events would provide information about conditions that arose following the date of the financial statements?
A) Settlement of long outstanding litigation.
B) Collection of a past due account receivable.
C) Loss of inventory as a result of a flood.
D) An additional tax assessment on prior income.

Question

Quizplus · Accepted Answer

The loss of inventory due to a flood is an event that occurred after the date of the financial statements and would provide information about conditions that arose subsequent to that date. A, B, and D are events that would have been known or could have been estimated at the date of the financial statements, and therefore would not provide information about subsequent conditions.

Which of the Following Subsequent Events Would Provide Information About