State the Two Primary Types of Subsequent Events That Require

question 56

Essay

State the two primary types of subsequent events that require consideration by management and evaluation by the auditor, and give two examples of each type.

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Definitions:

Normal Balance

the side (debit or credit) on which increases to an account are recorded, based on the type of account (asset, liability, equity, revenue, or expense).

Contra-Asset

An account that offsets or reduces the balance of a related asset account, such as accumulated depreciation.

Allowance for Doubtful Accounts

An estimation recorded on financial statements reflecting the amounts expected to be uncollected from accounts receivable.