A Type I Subsequent Event Should _______

question 38

Multiple Choice

A Type I subsequent event should _______.

• A)not require an adjustment to the financial statements
• B)always require an adjustment to the financial statements
• C)be disclosed in the notes to the financial statements only
• D)should be referred to management to determine disclosure requirements

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Definitions:

Accrued

Refers to amounts that are recognized in the financial statements before the cash transactions occur, representing liabilities for goods and services received but not yet paid.

Routine Entry

Repeated and standard accounting entries made for recurring transactions within a business's financial records.

Expense

An outflow of cash or other valuable assets from a person or company to another entity in exchange for goods or services.

Deferral

Recognition of revenue or expenses in a period different from when the transaction actually occurred, usually related to prepaid expenses or unearned revenue.