Long and Short, CPAs, were auditing Island Corporation for the year ended December 31, 2014. On January 11, 2015, a major custom
er of Island Corporation declared bankruptcy as the result of an uninsured loss due to a major fire in their warehouse on January 8, 2015. As a result, a material accounts receivable from the customer was determined to be uncollectible. Long and Short, CPAs, would expect the client to:____________. A) treat the loss as a subsequent event and adjust the 2014 financial statements to record the loss on uncollectible accounts.
B) record the loss on uncollectible accounts as a routine transaction in the year 2015.
C) treat the loss as a subsequent event and provide a footnote about the loss in the 2014 financial statements.
D) file a lawsuit against the customer in hopes of collecting some of the money owed to the client.
Answer: C) treat the loss as a subsequent event and provide a footnote about the loss in the 2014 financial statements.
Explanation:
The event happened in January 2015 which was after the books ended in December 2014. This makes it a subsequent event which is an event that occurs after the accounting period but before the Financial results are released.
The loss is therefore a subsequent event and must be treated by putting a footnote in the financial statement to reflect that the event happened after the accounting period.
Shondra performing the planning process of management functions. Planning means, first of all looking ahead and chalking out future courses of activity to be followed by each and every member of an organization as here Shondra is setting up a new department soon after she is chalking out future courses of duty of the manager and every member of the particular department which is very important for the smooth and effective running of an organisation.
Global or Economic competition seems to be on the market for several years with environmental regulations being reduced and that many markets liberalized.
A commonly held view of intensified global competition is its impact on individuals' tendency to find employment or maintain their present employment.
