In Regard to Identifying and Evaluating Subsequent Events, AU 560

question 17

Multiple Choice

In regard to identifying and evaluating subsequent events, AU 560.12 specifies that the auditor inquires of management having responsibility for financial and accounting matters as to:

• A) any substantial contingent liabilities or commitments existing at the balance sheet date or report date.
• B) any significant changes in capital stock, long-term debt, or working capital to the date of inquiry.
• C) the current status of items previously accounted for on the basis of tentative, preliminary, or conclusive data.
• D) whether any unusual adjustments have been made since the report date.
• E) litigation, claims, and assessments.

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Definitions:

Alternating Current

The form in which electrical current is generated at power stations and transmitted along power lines to customers. Alternating current is created by causing electrons to flow in an alternating positive and negative manner.

AC Generator

A machine that converts mechanical energy into alternating current electrical energy.

DC Motor

An electric motor that runs on direct current electricity, widely used in various applications due to its simplicity and ease of control.

Magnetic Fields

Invisible fields produced by electrically charged objects, affecting the behavior of charged objects in the vicinity.