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:

Bond Coupon Rate

The interest rate stated on a bond when issued, which represents the annual interest payment divided by the bond's face value.

Unrealized Profit

A profit that has been generated on paper through an investment but has not yet been realized through a sale.

Intercompany Sale

Transactions of goods, services, or assets between divisions, subsidiaries, or companies controlled by the same parent company.

Mark-Up

The percentage added to the cost price of goods to cover overhead and profit, determining the selling price.