Events occurring after the reporting period but before authorisation are categorized as which two types?

Events occurring after the reporting period but before authorisation are categorized as which two types?

• A. A Adjusting Events and Non-Adjusting Events
• B. B Material Events and Immaterial Events
• C. C Provisions and Contingencies
• D. D Recognised and Unrecognised Events

Answer: (A)

The key idea is how events after the reporting period are treated when the financial statements are being prepared and authorised. They fall into two categories: adjusting events and non-adjusting events. An adjusting event is one that provides evidence about conditions that existed at the end of the reporting period, so it requires adjustments to the financial statements. For example, if a customer defaults or a lawsuit is settled after year‑end but before authorisation, indicating an issue that existed at the period end, you adjust the accounts. A non‑adjusting event arises from conditions that developed after the reporting period; you do not adjust the statements, though you may need to disclose the event if it is material to users’ understanding. This framework explains why the two types are adjusting events and non‑adjusting events.

The key idea is how events after the reporting period are treated when the financial statements are being prepared and authorised. They fall into two categories: adjusting events and non-adjusting events. An adjusting event is one that provides evidence about conditions that existed at the end of the reporting period, so it requires adjustments to the financial statements. For example, if a customer defaults or a lawsuit is settled after year‑end but before authorisation, indicating an issue that existed at the period end, you adjust the accounts. A non‑adjusting event arises from conditions that developed after the reporting period; you do not adjust the statements, though you may need to disclose the event if it is material to users’ understanding. This framework explains why the two types are adjusting events and non‑adjusting events.