Adjusting events provide evidence of conditions that exist at year-end.

• A. True
• B. False
• C. They may also indicate conditions after year-end
• D. They are only recognized for tax purposes

Answer: (A)

Adjusting events are events after the reporting period that provide evidence about conditions that existed at the end of the reporting period. Because they reveal information about what was already in place at year-end, they require changes to the financial statements for that year. That’s why the statement is true: adjusting events confirm conditions that existed when the year ended, and the related amounts should be recognized or disclosed accordingly. If an event after year-end stems from conditions that developed after the period, it would be treated as a non-adjusting event and usually disclosed rather than adjusting the year-end numbers.