Which of the Following Statements Best Describes a Subsequent Event

question 65

Multiple Choice

Which of the following statements best describes a subsequent event?

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

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Definitions:

Straight-Line Method

A depreciation method that allocates an equal amount of the depreciable cost of an asset to each year of the asset's useful life.

Capital Lease

An agreement that grants the lessee the right to use an asset for a long period, typically seen as a purchase by the lessee for accounting purposes.

Original Amount

The initial sum of money involved in a financial transaction, before any deductions, depreciation, or appreciation.

Guaranteed Residual Value

An assurance that an asset will have a specified value at the end of its lease term.