When Obtaining Evidence Regarding Litigation Against an Entity, the CPA

question 42

Multiple Choice

When obtaining evidence regarding litigation against an entity, the CPA would be least interested in determining:

• A)an estimate of when the matter will be resolved.
• B)the period in which the underlying cause of the litigation occurred.
• C)the probability of an unfavorable outcome.
• D)an estimate of the potential loss.

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Definitions:

Market Price

The present cost at which a service or asset is available for purchase or sale.

Par Value Common Stock

The nominal or face value assigned to common shares in the charter of a corporation, which has little relation to the market value.

Paid-in Capital

The amount of money shareholders have invested in a company in exchange for equity, excluding any earnings retained by the company.

Market Value

The ongoing rate at which a commodity or service is offered for buying or selling in the market.