An Auditor's Client Has Violated a Minor Requirement of Its

question 21

Multiple Choice

An auditor's client has violated a minor requirement of its bond indenture that could result in the trustee requiring immediate payment of the principal amount due.The client refuses to seek a waiver from the bond trustee.Request for immediate payment is not considered likely.Under these circumstances,the auditor must

• A) Require classification of bonds payable as a current liability.
• B) Contact the bond trustee directly.
• C) Disclose the situation in the auditor's report.
• D) Obtain an opinion from the company's attorney as to the likelihood of the trustee's enforcement of the requirement.

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Definitions:

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The total cost of production divided by the quantity produced, representing the cost per unit of output.

Price-fixing

An illegal agreement among competitors to set prices at a certain level, rather than allowing them to be determined by free market forces.

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Organizations that facilitate the buying and selling of art pieces through an auction system, often dealing with high-value items.

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A diverse group of ray-finned fish known for their prominent barbels, which resemble a cat's whiskers.