A Friend Comes to You with a Set of Financial

question 54

Essay

A friend comes to you with a set of financial statements that he thinks contains an error.The footnotes contain a note on a bond issue sold after the end of the reporting period.Your friend is sure this is an error because the transaction occurred after the cutoff date for the financial statements.
Required:
Explain to your friend why certain items that occur after the end of an accounting period are included in the financial statements and the manner in which they can be disclosed.

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