Which Event That Occurred After the End of the Financial

question 60

Multiple Choice

Which event that occurred after the end of the financial year under audit but prior to issuance of the auditor's report would NOT require disclosure in the financial statements?

• A) Loss of plant or inventories as a result of fire or flood
• B) Sale of a bond or share issue
• C) A major drop in the quoted market price of the shares of the corporation
• D) Settlement of litigation when the event giving rise to the claim took place after the balance sheet date

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of the operation and output increases.

Coordination Problems

Challenges that arise in aligning the plans and actions of multiple parties in order to achieve a common goal or optimize outcomes.

Economic Profit

is the excess of total revenue over the total costs, including both explicit and implicit costs.

Accounting Profit

Accounting profit is the net income a company reports on its financial statements, calculated as total revenues minus explicit costs and depreciation.