State the two primary types of subsequent events that require consideration by management and evaluation by the auditor, and give two examples of each type.

State the two primary types of subsequent events that require consideration by management and evaluation by the auditor, and give two examples of each type.

Answer:

Events that have a direct effect on the financial statements and required adjustment. Examples include declaration of bankruptcy by a customer with an outstanding accounts receivable balance due to deteriorating financial condition; settlement of litigation at an amount different from the amount recorded on the books.
Events that have no direct effect on the financial statements but for which disclosure is advisable. Examples include a decline in the market value of securities held for temporary investment or resale during the subsequent period; issuance of bonds or equity securities during the subsequent period.

Comments

Popular posts from this blog

Examine the collapse of Han. What factors explain how this occurred? How influential in Han Dynasty on Chinese History?

Summarize effective communication strategies in organizational hierarchies, and review the role and relevance of the organizational grapevine

Describe at least three of the general information skills essential for all business careers.