A Friend Comes to You with a Set of Financial

question 54

Essay

A friend comes to you with a set of financial statements that he thinks contains an error.The footnotes contain a note on a bond issue sold after the end of the reporting period.Your friend is sure this is an error because the transaction occurred after the cutoff date for the financial statements.
Required:
Explain to your friend why certain items that occur after the end of an accounting period are included in the financial statements and the manner in which they can be disclosed.

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Definitions:

United Nations Convention

An international treaty drafted and adopted by member states of the United Nations, addressing various global issues and subjects.

Voidable Title

A legal status indicating that a title or ownership can be declared invalid by one of the parties due to certain defects or fraudulent circumstances.

Void Title

A title to property or ownership that is invalid or ineffective, usually due to legal defects or because it was acquired through fraudulent means.

True Title

The legitimate ownership of property or assets, free of liens or disputes, legally recognized and vested in an entity or individual.