Which of the Following Is an Example of a Non-

question 22

Multiple Choice

Which of the following is an example of a non- adjusting events after the reporting date?

• A)a bank's withdrawal of a necessary line of credit to a company that had been facing financial difficulties during the financial year
• B)the discovery of fraud or errors that show that the financial statements are incorrect
• C)a decline in the market value of listed investments after the end of the reporting period
• D)settlement,after the end of the reporting period,of legal action taken against the entity that establishes the exact amount of the claim that was in existence,but uncertain,at reporting date

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Definitions:

Accounts Receivable

Outstanding dues from customers for goods or services a company has already delivered.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value.

Cash Ratio

A liquidity metric that measures a company's ability to pay off its short-term liabilities with its cash and cash equivalents.

PE Ratio

Price-to-Earnings Ratio is a measure that compares a company's current share price to its per-share earnings.