Which of the Following Is the Best Example of a Type

question 73

Multiple Choice

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

• A)A related-party transaction occurs during fieldwork.
• 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 materially in excess of estimates.
• D)The company initiates an initial public offering subsequent to year-end.

---

Definitions:

Sale of Goods Act

Legislation governing the sale of goods, providing rules on contracts, property transfer, and warranties to protect buyers and sellers.

Fitness and Quality

Standards and criteria that products or services must meet to be considered satisfactory and suitable for their intended purpose.

Principle Of Privity

The Principle of Privity in contract law states that only parties involved in the contract have the right to sue or be sued on that contract, highlighting the exclusivity of contractual obligations and benefits.

Consumer Protection

Laws and regulations designed to safeguard buyers of goods and services against unfair practices.