Management Determined It Was Probable That a Pending Litigation Claim

question 26

Multiple Choice

Management determined it was probable that a pending litigation claim would result in a material loss. The loss was disclosed in the footnotes to the financial statements but was not accrued in the income statement. If the auditors believe an accrual should be made, what type of report should be issued?

• A)Standard (unmodified)report.
• B)Unmodified opinion with an emphasis-of-matter paragraph.
• C)Qualified opinion based on a circumstance-imposed scope limitation.
• D)Qualified or adverse opinion based on a departure from GAAP.

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Definitions:

Task Structure

The degree to which job assignments are organized and defined, including clear roles, goals, and procedures.

Profit Motive

is the primary incentive for businesses to operate, focusing on generating financial gain as the main objective of their activities.

Personalized Charismatics

Leaders who possess an innate charm and appeal that inspire loyalty and enthusiasm, often blending personal qualities with leadership abilities.

Adaptive Leaders

Leaders who are able to adjust their leadership style and strategies to meet the changing needs of their organization and workforce.