1. Type 1 subsequent events involve events that existed ___ the balance sheet da
ID: 2528215 • Letter: 1
Question
1. Type 1 subsequent events involve events that existed ___ the balance sheet date. (after, before, between, close to, near, on)
2. Type 1 subsequent events require ___ of the financial statements. (adjustment, consideration, disclosure, documentation, duplication)
3. Type 2 subsequent events come into existence ___ the balance sheet date. (after, before, between, close to, near, on)
4. Type 2 subsequent events occur after the balance sheet date but ___ the completion of fieldwork. (after, close to, near to, prior to, subsequent to)
5. Type 1 subsequent events come into existence due to new ___ becoming available. (auditors, clients, documentation, evidence, judgement)
Explanation / Answer
Answer 1:
Correct choice is: on
Type 1 subsequent events involve events that existed on the balance sheet date.
Explanation:
By definition Type 1 subsequent events are events that existed at the financial statement date. As such other options after, between, close to, near are incorrect. However, option 'before' is also correct. But between options 'before' and 'on', option 'on' is more appropriate.
Answer 2:
Correct choice is: adjustment
Type 1 subsequent events require adjustment of the financial statements.
Explanation:
As per FASB, the financial statements have to be adjusted for any changes in estimates resulting from Type 1 subsequent events. As such other options like consideration, disclosure, documentation, duplication are incorrect.
Answer 3:
Correct choice is: after
Type 2 subsequent events come into existence after the balance sheet date.
Explanation:
By definition Type 2 subsequent events are events that occurred/came into existence after the balance sheet date. As such other options before, between, close to, near, on are incorrect.
Answer 4:
Correct choice is: prior to
Type 2 subsequent events occur after the balance sheet date but prior to the completion of fieldwork.
Explanations:
Events that occur after balance sheet date but prior to the completion of audit fieldwork are Type 2 subsequent event. Other options are incorrect.
Answer 5:
Correct choice is: new evidence
Type 1 subsequent events come into existence due to new evidence becoming available.
Explanation:
Type 1 subsequent events involve events that existed at the balance sheet date. These events come into existence when new evidences become available after balance sheet date. Other options are incorrect.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.