The draft financial statements of X Ltd. are under consideration. The accounting treatment of the following material
Question:
The draft financial statements of X Ltd. are under consideration. The accounting treatment of the following material events after the balance sheet date needs to be determined.
1. The insolvency of a major customer with a substantial debt outstanding at the balance sheet date.
2. A fire destroying some of the company’s inventory (the company’s going concern status is not affected).
3. An issue of shares to finance expansion.
4. Sale for less than cost of some inventory held at the balance sheet date. According to AS--4 (Events after Balance Sheet date), which of the above events require an adjustment to the figures in the draft financial statements ?
A. 1 and 4 only
B. 1, 2 and 3 only
C. 2 and 3 only
D. 2 and 4 only
Step by Step Answer:
Corporate Accounting As Per The Companies Act 2013 Including Rules 2014 And 2015
ISBN: 9789352605569
2nd Edition
Authors: M Hanif, A Mukherjee