Which of the Following Post-Balance-Sheet Events Would Require Adjustment of the Accounts

question 38

Multiple Choice

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

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

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Definitions:

Chebyshev's Theorem

A statistical rule that gives a minimum proportion of observations that fall within a specified number of standard deviations from the mean, for any distribution.

Empirical Rule

A statistical rule stating that for a normal distribution, nearly all data will fall within three standard deviations of the mean.

Five-number Summary

A descriptive statistic that provides a quick overview of a data set's distribution, consisting of the minimum, first quartile, median, third quartile, and maximum.

Starting Salaries

The initial compensation that an employee receives when starting a new job.