Which of the Following Material Events Occurring Subsequent to the Balance

question 22

Multiple Choice

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

• A)sale of long-term debt or capital stock
• B)loss of a plant as a result of a flood
• C)major purchase of a business that is expected to double the sales volume
• D)settlement of litigation in excess of the recorded liability

---

Definitions:

Cash Inflows

The total amount of money being transferred into a company, typically from operations, financing, or investing activities.

Net Cash Inflows

The total amount of cash received by a company during a specific period, minus the total amount of cash outflows.

Payback Period

The length of time required to recover the cost of an investment, calculated by dividing the initial investment by the annual cash inflow.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money and risk.