When Dealing with Contingencies

question 90

Multiple Choice

When dealing with contingencies:

• A)all material contingencies must be disclosed or footnoted.
• B)the auditor must exercise considerable professional judgment when evaluating whether the client has applied the appropriate treatment.
• C)it is easy for the auditor to uncover contingencies without management's cooperation.
• D)the review for contingent liabilities is only performed at the beginning and the end of the audit.

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Definitions:

Undrawn Borrowing Facilities

Credit facilities available to an entity that have not yet been utilized or drawn down.

Cash Receipts

Money received by a business during a particular period, including revenues from sales, loan proceeds, and cash from other sources.

Accounts Receivable

Money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.

Bad Debts

Accounts receivable that a company is unable to collect, often written off as an expense because they are considered irrecoverable.