Preparing Basic Financial Statements — ACCA Practice Question 22

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Determine if the event provides evidence of conditions that existed AT the end of the reporting period (Adjusting) or arose AFTER the reporting period (Non-adjusting).

Full Answer

C.The bankruptcy of a major customer shortly after the year-end, relating to a debt that existed at the year-end.✓ Correct

Under IAS 10, adjusting events provide evidence of conditions that existed at the end of the reporting period. The bankruptcy of a customer confirms that the receivable balance at year-end was impaired. Fires, market declines, and new restructuring plans relate to conditions arising after the reporting period and are non-adjusting (though they may require disclosure).

Common mistakes

Thinking that major disasters (like a fire) must be adjusted for because of their size.

Section A

Which of the following is an example of an adjusting event after the reporting period under IAS 10?

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Full Answer

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Practice the full ACCA FA — Financial Accounting Practice Exam 6

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Section A Which of the following is an example of an adjusting event after the reporting period under IAS 10?

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Full Answer

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Practice the full ACCA FA — Financial Accounting Practice Exam 6

More questions from this exam

Section A

Which of the following is an example of an adjusting event after the reporting period under IAS 10?