Which of the Following Is Least Likely to Require Significant

question 12

Multiple Choice

Which of the following is least likely to require significant auditor judgment about the dollar amount to be disclosed in the financial statement?

• A) Contingent liability related to pending litigation.
• B) Assumptions made in preparation of the estimate of income tax expense for the year.
• C) The value of inventory.
• D) Cash on hand at the end of the year.

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Definitions:

Bond Indenture

A legal document specifying the terms and conditions under which a bond is issued, including the interest rate, maturity date, and other covenants.

Stated Interest Rate

The annual interest rate declared on a financial instrument, such as a loan or bond, not taking into account compounding or fees.

Market Interest Rate

The prevailing rate of interest available in the market, influencing the rates charged on loans and paid on deposits.

Face Value

The face value or monetary amount displayed on a bond, note, or any financial document, indicating the total due upon its maturity.