Question

A subsequent event that provides additional information about a condition that existed at the balance sheet date is referred to as a(n):
A. Revised disclosure
B. Subsequent discovery of facts
C. Type I subsequent event
D. Type II subsequent event

Answer 1

Answer C: Type I subsequent event

Explanation:

Subsequent event:

Subsequent events are the events that occurs after the balance sheet date but before the final statement have been issued.

Types of Subsequent event:

1. Type I subsequent event:

These are the subsequent event that provides the additional information about Conditions that existed at the balance sheet date and adjusted to the financial statement,

2. Type II subsequent event:

These are the subsequent event that provides the information about conditions that occurred after the balance sheet date and condition not existed on the balance sheet date. No adjustment required in the financial statement. Disclosure is required.

From the above explanation, it is clear that Type I subsequent event provides the additional information about conditions that existed at the balance sheet date. Other options are incorrect.

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