Shortly After Year-End, Zero Corporation Was Informed of the Bankruptcy

question 2

Multiple Choice

Shortly after year-end, Zero Corporation was informed of the bankruptcy of Bingo. Zero Corporation showed a receivable of $10,000 due from Bingo as of year-end-none of which seems recoverable. The receivable had been questionable for some time as Bingo had been experiencing financial difficulties for the past several years. Yet, Bingo's bankruptcy did not occur until after Zero Corporation's year-end. Under these circumstances: $$\begin{array} { | c | c | c | c | } \hline & \begin{array} { c } \text { The financial statements } \\\text { shoud be acjusted }\end{array} & \begin{array} { c } \text { The event requires financial statement } \\\text { disclosure, but no adjustment }\end{array} & \begin{array} { c } \text { The auditor's report should be modified } \\\text { for a lack of consistency }\end{array} \\\hline \text { A. } & \text { Yes } & \text { No } & \text { No } \\\hline \text { B. } & \text { Yes } & \text { No } & \text { Yes } \\\hline \text { C. } & \text { No } & \text { Yes } & \text { Yes } \\\hline \text { D. } & \text { No } & \text { Yes } & \text { No } \\\hline\end{array}$$

• A) Option A
• B) Option B
• C) Option C
• D) Option D

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Definitions:

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