Which of the following material events occurring subsequent to the balance sheet date would require an adjustment to the financial statements before they could be issued?
A. Sale of long-term debt or capital stock.
B. Loss of a plant as a result of a flood.
C. Major purchase of a business that is expected to double sales volume.
D. Settlement of litigation, in excess of the previously recorded liability.
Answer: Settlement of litigation, in excess of the previously recorded liability.
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