Which of the Following Subsequent Events Would Require Adjustment of the Accounts

question 69

Multiple Choice

Which of the following subsequent events would require adjustment of the accounts before issuance of the financial statements?

• A)Loss of plant as a result of fire
• B)Changes in the quoted market prices of securities held as an investment
• C)Loss on an uncollectible account receivable resulting from a customer's major flood loss
• D)Loss on a lawsuit, the outcome of which was deemed uncertain at year end.

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Definitions:

International Monetary Fund

An international organization created for the purpose of promoting global monetary and exchange stability, facilitating the expansion and balanced growth of international trade, and assisting in the establishment of a multilateral system of payments for current transactions.

Inflation

The rate at which the general level of prices for goods and services is rising, and, subsequently, purchasing power is falling.

Price Level

The central value of current prices for each good and service in the economy.

Value of Money

The purchasing power of money, which varies with inflation and economic conditions, indicating how much goods and services money can buy.