If an Event or Transaction That Occurs After Reporting Date

question 9

Multiple Choice

If an event or transaction that occurs after reporting date does not relate to conditions that existed at reporting date then:

• A) No action should be taken to report the event or transaction in the financial reports.
• B) The balance sheet should not be adjusted but effects on the income statement should be reflected in that statement.
• C) The event or transaction should be disclosed in the notes to the accounts as a post-reporting date event and the financial statements adjusted appropriately.
• D) The event or transaction should be disclosed in the notes to the accounts if it is material.
• E) None of the given answers.

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Definitions:

Disposable Income

The available amount for households to spend and save, subsequent to income tax deductions.

Autonomous Consumption

The level of consumption that occurs when income is zero, representing the expenditures that consumers must make even when they have no income.

Disposable Income

Refers to the funds that individuals can spend or save after all income taxes are deducted.

Total Consumption

The aggregate amount of goods and services consumed in an economy, including individual and governmental consumption.