Which of the Following Subsequent Events (Post-Balance-Sheet Events) Would Require

question 49

Multiple Choice

Which of the following subsequent events (post-balance-sheet events) would require adjustment of the accounts before issuance of the financial statements?

• A) Loss of plant as a result of fire
• B) Changes in the quoted market prices of securities held as an investment
• C) Loss on an uncollectible account receivable resulting from a customer's major flood loss
• D) Loss on a lawsuit, the outcome of which was deemed uncertain at year end.

---

Definitions:

Stock Market Downturn

A period during which stock prices fall across the majority of the market, often reflecting broader economic trends or issues within specific sectors.

Risk/Return

The principle that potential return rises with an increase in risk. Investors must balance the desire for low risk with the need for higher returns.

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of satisfaction.

Treasury Securities

Government debt instruments issued by the Treasury Department of a country to fund its national debt and finance government spending.