Final answer:
A) A subsequent event is an event that occurs between the date of the financial statements and the date of the auditor's report, which may require adjustments to the financial statements or disclosure in the notes.
Step-by-step explanation:
A subsequent event refers to significant events that occur between the balance sheet date and the date when the financial statements are issued or available to be issued.
Specifically, option A defines subsequent events as events occurring between the date of the financial statements and the date of the auditor's report.
These events can be of two types: recognized subsequent events (those that provide evidence of conditions that existed at the date of the financial statements).
nonrecognized subsequent events (those that provide evidence of conditions that arose after the balance sheet date).The correct answer to the student's question is option A.
Which refers to events occurring between the date of the financial statements and the date of the auditor's report. These events may cause adjustments to the financial statements.
If they provide additional information about conditions that existed at the balance sheet date. Alternatively, if the events provide evidence about conditions that arose after the balance sheet date.
Disclosure in the notes to the financial statements might be necessary, but adjustments to the financial statements are typically not required.