When the Proper Disclosure in the Financial Statements of Material

question 70

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

• A)the auditor's opinion as to the expected outcome.
• B)the opinion of legal counsel or management as to the expected outcome.
• C)an estimate of the amount or a statement that the amount cannot be estimated.
• D)the steps the client has taken to ensure that it doesn't recur.

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Definitions:

Encode

To convert data into a particular form, especially for the purpose of ensuring privacy, security, or compatibility.

Open to Interpretation

Describes information, statements, or artworks that can be understood or explained in different ways by different people.

Context

The circumstances or background information that helps in understanding the full meaning of a situation or topic.

Communication Event

An occurrence where information is exchanged between individuals or groups, using various modes such as verbal, non-verbal, or written means.