Which of the Following Procedures Might Be Useful in Discovering

question 66

Multiple Choice

Which of the following procedures might be useful in discovering a contingent liability for a lawsuit that management is intentionally neglecting to disclose?

• A)inquiries (orally and in writing)of management
• B)analyzing legal expense and reviewing invoices and statements from outside legal counsel
• C)reviewing current and previous years' Canada Revenue Agency correspondence
• D)obtaining a letter of representation from management that it is not aware of any undisclosed contingent liabilities

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Definitions:

Time-Driven Activity-Based Costing

Time-Driven Activity-Based Costing is an accounting method that assigns costs to products and services based on the time employees spend on activities.

Order Fulfillment Department

The division of a company responsible for processing customer orders and ensuring the delivery of products or services.

Capacity Analysis

An evaluation process to determine a company's ability to meet its production or service delivery goals with the current resources and infrastructure.

Time-Driven Activity-Based Costing

A method of costing that assigns costs based on the actual duration of activities and the cost of supplying resources, rather than on estimated allocations.