Non-adjusting events are events which did not exist at year-end.

• A. True
• B. False
• C. They may exist at year-end
• D. They must be disclosed always

Answer: (A)

After the reporting date, events are split into those that adjust the financial statements and those that do not. Non-adjusting events are events that do not reflect conditions that existed at year-end; they arise after the reporting period. They don’t lead to changes in the numbers in the financial statements, but if they are material, they must be disclosed to prevent users from being misled. So, the statement is true: non-adjusting events are events that did not exist at year-end. For example, a major fire or a significant business acquisition announced after the year-end would typically be a non-adjusting event, requiring disclosure if material, unless it provides evidence about conditions that existed at year-end (which would then be adjusting).