Question

Type II subsequent events occur _______.

A. After the date of the financial statements.
B. Between the date of the financial statements and the date of the auditor's report.
C. At the date of the financial statements.
D. None of the above are correct.

Answer 1

Type II subsequent events provide additional information about conditions that did not exist at the balance sheet date but arose afterward. The examples provided of a person standing up or a car accelerating do not illustrate such events, making 'D. None of the above' the correct answer.

Step-by-step explanation:

Type II subsequent events are events that occur after the balance sheet date but before financial statements are issued or available to be issued. These events provide additional information about conditions that did not exist at the balance sheet date but arose subsequent to that date. Examples of such events include a loss on a lawsuit, which was declared after the balance sheet date, or the bankruptcy of a customer that occurred subsequent to the financial statements' issuance date.

Considering the provided options of 'a person standing up from a seated position' and 'a car accelerating while driving', it's clear that these do not relate to the accounting concept of Type II subsequent events. Therefore, the correct answer to this question would be 'D. None of the above are correct' because neither example reflects events that provide additional information on the company's financial condition after the reporting period.