Which of the Following Situations Would Require Adjustment to or Disclosure

question 46

Multiple Choice

Which of the following situations would require adjustment to or disclosure in the financial statements?

• A) A merger discussion
• B) The application for a patent on a new production process
• C) Discussions with a customer that could lead to a 40 percent increase in the client's sales
• D) The bankruptcy of a customer who regularly purchased 30 percent of the company's output

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Definitions:

Rule 10b-5

A regulation enacted by the Securities and Exchange Commission dealing with fraud and manipulation in the securities markets.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

Nonpublic Corporate Information

Information related to a company that has not been released to the public and could be considered confidential or proprietary.

1933 Act

Also known as the Securities Act of 1933, a U.S. law enacted to ensure more transparency and honesty in the marketing and sale of securities, aiming to prevent frauds.