If the Date of an Entity's Financial Statements Is December

question 13

Multiple Choice

If the date of an entity's financial statements is December 31, the date of the auditor's report is February 20, and the audit report release date is February 22, which of the following is considered a subsequent event?

• A)A significant acquisition that was announced on February 1 and will be finalized on October 1.
• B)A court settlement on March 3 related to a case that was pending on December 31.
• C)Losses from the devaluation of a foreign currency that became finalized on February 21.
• D)The entity's announcement of a major restructuring plan on December 30 that will be implemented during the upcoming year.

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Definitions:

CVP Analysis

Cost-Volume-Profit Analysis; a management accounting tool that helps understand the relationship between costs, volume, and profit.

Inventory

Inventory consists of goods and materials held by a business for the purpose of resale or as part of the production process.

Contribution Margin

The selling price per unit minus the variable cost per unit, used to cover fixed costs and contribute to net profit.

Selling Price

The price for which a product or service is sold to the customer.