Management Determined It Was Probable That a Pending Litigation Claim

question 26

Multiple Choice

Management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statements but was not accrued in the income statement. If the auditors believe an accrual should be made, what type of report should be issued?

• A)Standard (unmodified)report.
• B)Unmodified opinion with an emphasis-of-matter paragraph.
• C)Qualified opinion based on a circumstance-imposed scope limitation.
• D)Qualified or adverse opinion based on a departure from GAAP.

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Definitions:

Revolutionary Social Movement

A collective attempt to enact major changes in society's structure and norms through radical actions.

Egypt

A country in North Africa, known for its ancient civilization, pyramids, and the Nile River.

Le Bon

A reference to Gustave Le Bon, a French social psychologist best known for his work on crowd psychology and the psychology of revolution.

Large Crowds

refers to gatherings of a considerable number of individuals in a specific location, which can influence behavior, mentality, and social dynamics.