Which Type of Subsequent Event Requires Consideration by Management and Evaluation

question 69

Multiple Choice

Which type of subsequent event requires consideration by management and evaluation by the auditor?

• A) subsequent events that have no direct effect on the financial statements but for which disclosure is advisable
• B) subsequent events that have a direct effect on the financial statements and require adjustment
• C) both A and B
• D) none of the above

---

Definitions:

Hierarchical Model

A way of organizing objects, ideas, or information in a structure where items are ranked according to levels of importance or authority.

Correlation Coefficients

Statistical measures that indicate the extent to which two or more variables fluctuate together.

Theoretical Entity

Concepts or things that are assumed to exist to rationalize, explain, or predict phenomena, although they may not be directly observable.

Frontal Cortex

a region of the brain located in the front part of the cerebral cortex, involved in decision making, problem solving, conscious thought, and social behavior.