Which One of the Following Subsequent Events Will Least Likely

question 128

Multiple Choice

Which one of the following subsequent events will least likely result in an adjustment to the financial statements?

• A)Material change in the amount of settlement of a lawsuit which had been estimated at year end.
• B)Bankruptcy of a customer who owes your client a material amount on open account at year end for which there is an inadequate allowance estimate.
• C)Sale of a large block of inventory at a price materially below carrying value.
• D)Signing of a letter-of-intent by the client to acquire 55% of another entity for stock.

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Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the amount of activities used to produce them.

Markup Percentage

The percentage added to the cost of goods to determine the selling price, reflecting the profit margin on sales.

Variable Costs

Costs that change in proportion to the level of goods or services produced by a business.

Rate of Return

A measure of the profitability or efficiency of an investment, expressed as a percentage of the original investment.