Question

Whenever subsequent events are used to evaluate the amounts included in the​ statements, care must be taken to distinguish between conditions that existed at the balance sheet date and those that come into being after the balance sheet date. The subsequent information should not be incorporated directly into the statements if the conditions causing the change in valuation
A. Took place before the balance sheet date.
B. Are reimbursable through insurance policies.
C. Occurred both before and after the balance sheet date.
D. Did not take place until after the balance sheet date.

Answer 1

Answer:

The correct answer is option D

D. Did not take place until after the balance sheet date

Explanation:

The subsequent information should not be incorporated directly into the statements if the conditions causing the change in valuation did not take place until after the balance sheet date to avoid a mix-up in the statement.