A Client Has a Calendar Year-End

question 36

Multiple Choice

A client has a calendar year-end. Listed below are four events that occurred after December 31. Which one of these subsequent events might result in adjustment of the December 31 financial statements?

• A) sale of a major subsidiary
• B) adoption of accelerated depreciation methods
• C) write-off of a substantial portion of inventory as obsolete
• D) collection of 90% of the accounts receivable existing at December 31

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Definitions:

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment cost.

Original Maturity

The fixed term length at the issuance of a bond or other fixed-income security until it reaches its due date for the repayment of the principal.

Current Yield

Current yield is the annual income (interest or dividends) divided by the current price of the security.

Coupon Rate

The percentage of interest returned by a bond annually, measured against its face value.