Question

An example of a Type 1 subsequent event would be_______________.

A. A sudden change in senior management after the financial statement date.
B. A filing with the Securities and Exchange Commission (SEC) of an amended form 10K after the financial statement date.
C. The bankruptcy of a client's customer after year-end as a result of poor financial condition that existed as of the balance sheet date.
D. The bankruptcy of a client's customer after year-end as a result of poor financial condition that existed after the balance sheet date.

Answer 1

A Type 1 subsequent event in accounting involves A)a sudden change in senior management after the financial statement date, which affects the financial statements and should be disclosed.

Step-by-step explanation:

An example of a Type 1 subsequent event would be A. A sudden change in senior management after the financial statement date. Type 1 subsequent events are those that provide additional evidence about conditions.

That existed at the balance sheet date and should be recorded in the financial statements. In this case, the sudden change in senior management would provide information that affects the financial statements and therefore should be disclosed.