Subsequent events

Definition

Subsequent events in plain English

Financial statements are like a photo of a company on one specific day (the balance sheet date), but nobody actually publishes them until weeks later — so what happens in that gap? A subsequent event is news that lands after the photo date but before the report goes out, and the rule is about whether the news reveals something that was ALREADY true on photo day. If a customer was secretly going broke on the photo date and formally goes bankrupt two weeks later, you update the numbers (the condition existed); if a brand-new fire destroys a warehouse after the photo, you just add a note explaining it (it's new). It's the difference between 'this proves how sick I already was' versus 'I caught a totally new cold yesterday.'

Related Financial Accounting terms

• Accounting equation
• Accounts payable
• Accounts receivable
• Accrual basis
• Accumulated depreciation
• Acquisition cost
• Adjusting entries
• Allowance for doubtful accounts
• Amortization
• Additional Paid-In Capital (APIC)