Prior to the Finalisation of the Financial Statements for the Year

question 24

Multiple Choice

Prior to the finalisation of the financial statements for the year ended 30 June 2014,a company experienced a number of material events,including:
I on 10 July 2014 the directors decided to close a division of the company at an estimated cost of $1 000 000.
II on 10 August 2014 a court decision found the company liable to pay damages of $500 000 to a major customer who had commenced legal action in April 2012.
III an independent valuation of property conducted on 20 July 2014 revealed that the directors' valuation included in the 30 June 2014 financial statements was overstated by $700 000.
In respect of the events listed above,it will be necessary to adjust the financial statements,by way of general journal entries,for:

• A)I,II and III.
• B)II only,and make a note disclosure for I and III.
• C)III only,and make a note disclosure for I and II.
• D)II and III only,and make a note disclosure for I.

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Definitions:

E-Commerce

The buying and selling of goods or services using the internet, and the transfer of money and data to execute these transactions.

The Internet

A vast global network of connected computers and servers that facilitate the exchange of data, communication, and access to information.

Customer Value

The perception of what a product or service is worth to a customer versus the possible alternatives, reflecting the benefits, quality, and satisfaction it delivers.

Seven Cycles

A brand or company known for manufacturing custom and high-quality bicycles.