Which of the Following Material Events Occurring Subsequent to the Balance

question 48

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 sales volume.
• D)Settlement of litigation, in excess of the previously recorded liability.

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Definitions:

Inflation Rate

measures the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Consumer Price Index

An indicator that assesses the typical shift through time in the expenses urban purchasers face for a predetermined array of consumer items and services.

Inflation Rate

The percentage increase in the general level of prices for goods and services over a period.

Consumer Price Index

A measure of the average shift in costs for various consumer items and services bought by urban dwellers, the Consumer Price Index reveals how these prices change over time.