ACCA · Question 07 · Preparing Basic Financial Statements
Section A
Apex Consulting's financial year ended on 31 December 20X5. On 15 February 20X6, before the financial statements were authorized for issue, a major client went into liquidation. The client owed Apex $40,000 as of 31 December 20X5. The liquidator confirmed that unsecured creditors will receive nothing.
How should this event be treated in the financial statements for the year ended 31 December 20X5?
Answer options:
Disclose the event in the notes to the financial statements only.
Adjust the financial statements by writing off the $40,000 receivable.
Ignore the event as it occurred after the reporting period.
Create a provision for $40,000 in the 20X6 financial statements.
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