ACCA Financial Reporting (F7) Practice Exam 2025 – Complete Prep Guide

Adjusting events after the reporting period refer to events that provide additional evidence about conditions that existed at the end of the reporting period. Thus, they require adjustments to the financial statements to ensure that the information presented is accurate and reflects the economic reality as of that date.

For instance, if a company learns of a lawsuit outcome after the reporting period that pertains to incidents occurring before the reporting period, this would require an adjustment because it confirms the existence of a liability that was present at the reporting date. These events are crucial for ensuring the completeness and reliability of financial reporting, as they help in presenting a true and fair view of the company's financial position.

The other concepts listed do not adequately describe adjusting events: events that have no effect on the financial statements do not fulfill the criteria for adjustment; incidents that only occur before the reporting period don’t provide insights into the status at the reporting date; and changes in estimates of future cash flows are more related to revisions in accounting estimates rather than reflecting clarifications of conditions existing at the reporting period’s end.