Which of the Following Statements Extracted from a Client's Lawyer's

question 13

Multiple Choice

Which of the following statements extracted from a client's lawyer's letter concerning litigation,claims,and assessments most likely would cause the auditor to request clarification?

• A) "I believe that the possible liability to the company is nominal in amount."
• B) "I believe that the action can be settled for less than the damages claimed."
• C) "I believe that the plaintiff's case against the company is without merit."
• D) "I believe that the company will be able to defend this action successfully."

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Definitions:

Par Value

The nominal or face value of a stock or bond as stated by the issuer.

Cash Flow Test

A financial analysis method to determine the liquidity of a company by measuring the cash it generates or uses in its operations.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Revised Act

A legislative act that has been amended or updated from its original version to incorporate changes in law or policy.