Which of the Following Is the Best Example of a Type

question 16

Multiple Choice

Which of the following is the best example of a Type I subsequent event?

• A)A related-party transaction occurs during the course of the audit.
• B)The company defaults on its line-of-credit with the bank subsequent to year end but previous to the release of the audit opinion.
• C)Litigation that was accrued as a liability in the year under audit is settled subsequent to year-end for an amount in excess of estimates.
• D)The company initiates an initial public offering subsequent to year-end.

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Definitions:

Reasonable Buyer

A hypothetical person who exercises average care, judgment, and information in their purchasing decisions, often referenced in legal contexts.

Seller's Representation

Statements made by a seller regarding the quality, condition, or legal status of the goods or property being sold.

Warranties of Title

Guarantees provided by a seller that they have the legal right to sell the property and that it is free from undisclosed encumbrances.

Sales Contracts

Agreements between buyers and sellers regarding the exchange of goods, services, or property for payment or promise of payment.