When the Proper Disclosure in the Financial Statements of Material

question 4

Multiple Choice

When the proper disclosure in the financial statements of material contingencies is through footnotes, the footnote should describe the nature of the contingency to the extent it is known and the:

• A) auditor's opinion as to the expected outcome.
• B) steps the client has taken to ensure that it doesn't recur.
• C) opinion of legal advisers or management as to the expected outcome.
• D) opinion of an outside independent party, such as an appraiser, as to the expected outcome.

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Definitions:

Counteroffer

A proposal made in response to an initial offer, which effectively rejects the original offer and proposes new terms for agreement.

Saxony Carpet

A type of carpet known for its dense, soft pile, often used in residential settings for a luxurious appearance.

Option

A contract that grants the holder the right, but not the obligation, to buy or sell an asset at a designated price within a specified timeframe.

Promissory Estoppel

A legal principle that prevents a promisor from retracting a promise which the promisee has relied upon to their detriment, in the absence of a formal contract.