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otez555 [7]
3 years ago
9

Zero Corp. suffered a loss having a material effect on its financial statements as a result of a customer’s bankruptcy that rend

ered a trade receivable uncollectible. This bankruptcy occurred suddenly because of a natural disaster 10 days after Zero’s balance sheet date but 1 month before the issuance of the financial statements and the auditor’s report. Under these circumstances, theA.Financial Statement should be adjusted B.No action C.Events require footnote disclosure, but not adjustment to financial statements D.Auditor report should be modified for a lack of consistency
Business
2 answers:
Harlamova29_29 [7]3 years ago
4 0

Answer:

C. Event require footnote disclosure, but not adjustment to financial statement

Explanation:

IAS 10 represents the accounting standard that govern the scenario under analysis - events after the reporting date.

Zero Corp suffered a loss having a material effect on their books, owning to customers bankruptcy. However, this bankruptcy erupted suddenly after the balance sheet date, but one month before the issuance of the financial statements and the auditor's report.

The scenario under consideration is a non adjusting event simply because it existed just after the balance sheet date. Going by IAS 10 stipulations, a non adjusting event only require a disclosed, especially seeing that the implications have s material effect on the going concern of the organization. Thus, the disclosure in this case, will ensure a description of:

1. The nature of the event

2. The effect on the financial statement.

The organization will do well to update its disclosure requirements, and ensure it take cognizance of any other conditions that existed after the balance sheet date, but before issuance.

timurjin [86]3 years ago
3 0

Answer:

Events require footnote disclosure, but not adjustment to financial statements.

Explanation:

A balance sheet is the statement of the financial position of a business at a particular period in time. So in this scenario if the balance sheet has already been prepared and bankruptcy occurred suddenly because of a natural disaster 10 days after Zero’s balance sheet date but 1 month before the issuance of the financial statements and the auditor’s report.

This requires a disclosure of the event after the balance sheet date. The event is a subsequent occurence and as such does not affect the balance sheet report.

The exception is when a subsequent event provides additional evidence of financial position as at the balance sheet date.

This is not the case here so only disclosure will be made.

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Answer:

B.  preference shares

Explanation:

Option A is wrong because equity shares provide a different rate of dividends to a shareholder. Equity shares are known as ordinary shares. Therefore, option C is wrong.

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Investment security​ does not give any dividends. So option E is wrong.

Option B is correct because preference shares give a fixed rate of dividend.

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4 years ago
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Vanyuwa [196]

Answer and Explanation:

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So that it is the right answer.

5 0
3 years ago
The laissez faire model is inspired by the work of which economic philosopher?
Vitek1552 [10]

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2 years ago
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Arisa [49]

Answer:

there was inflation

Explanation:

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When there is inflation, the price of goods in the market increases.

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