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Example of an adjusting event: Invoices received in respect of goods or services received before the year end.
how is this an adjusting event.
in may opinion, if at yearend no invoices has not been received for goods purchased before year end. DR. purchases CR purchase accrual. therefore no adjustment is required.sir i confuse these dates:
— Date of financial statement approved.
— Date of Audit report is signed.
— Date of financial statements are issued
— Date of AGMare they all different or some are same.
Because the invoice confirms the $ amount of the purchase. The DR Purchases/CR Accrual IS the accounting for the adjusting event. This is just one of the “period end adjustments” that reflects an adjusting event after the reporting date. Other examples are writing down inventory to NRV and making an allowance for expected credit losses in respect of trade receivables.
The sequence of events is:
1. Sign financial statements – in law, they don’t “exist” until they are signed
2. Sign the auditor’s report
3. Pass a resolution to issue the financial statements at the AGMDepending on the “regime” for general meetings, passing of resolutions, etc, the FS may be sent to the shareholders in advance of the AGM or presented at the AGM.
In practice … financial statements and the auditor’s report are signed and dated on the same day … which will be very very shortly before – if not the date of issue (e.g. signed in the morning and issued to shareholders at an AGM in the afternoon!)
And advance warning to you – just so you know – Thursday this week is the last date that I will be answering posts until Tuesday 16th November – I will be away on holiday without a computer, WiFi or access to my files. I will be making a post to that effect on Thursday so forum users can expect to have to wait.
Your Forum is really beneficial and helpful. I appreciate a lot the way u understand the point we are up to. we will be posting any doubts we have and we will wait.
Thanks
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