Which of the Following Would Be a Type II Subsequent

question 90

Multiple Choice

Which of the following would be a Type II subsequent event?

• A)Information becomes available that provides evidence about the valuation of an estimate or reserve that had been accrued at year end.
• B)A sale of inventory below carrying value provides evidence that the net realizable value was less than cost at year end.
• C)A stock dividend or split that takes place during the subsequent period should be disclosed.In addition,earnings-per- share figures should be adjusted to show the retroactive effect of the stock dividend or split.
• D)A material change occurs in the value of investment securities after the balance sheet date.

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Definitions:

Critical Value

A point on the scale of the test statistic beyond which we reject the null hypothesis, thus indicating that the observed data are highly unlikely under the null hypothesis.

Null Hypothesis

The hypothesis that there is no significant difference between specified populations, any observed difference being due to sampling or experimental error.

Degrees of Freedom

The number of independent values or quantities which can vary in the calculation of a statistic, often linked to the sample size.

Significance Level

The significance level, often denoted as alpha, is the probability of rejecting the null hypothesis in a statistical test when it is actually true, representing the risk of a type I error.