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

---

Definitions:

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated for cost of goods sold determination.

Gross Profit

The difference between sales and the cost of goods sold, indicating the profitability of a company's core business activities.

Estimated Cost

An approximation of the financial expenditure associated with a project or production.

Ending Inventory

The final value of goods available for sale at the end of an accounting period after subtracting the cost of goods sold.