Which of the Following Material Events Occurring Subsequent to the Balance

question 64

Multiple Choice

Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?

• A) loss of a plant as a result of a flood
• B) sale of long-term debt or capital stock
• C) settlement of litigation in excess of the recorded liability
• D) major purchase of a business that is expected to double the sales volume

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Definitions:

MRP

Acronym for Marginal Revenue Product, which measures the addition to total revenue resulting from the sale of the output produced by one more unit of a variable input.

Haircuts

Often used as an example in economics, referring to a service that cannot be stored, saved, or inventoried, and must be consumed at the point of production.

MRP

Material Requirements Planning, a planning and inventory control system used to manage manufacturing processes.

Purely Competitive

A market structure characterized by many buyers and sellers, where each seller offers a homogeneous product and no single buyer or seller can influence the market price.