In a typical case involving a Motor vehicle assembling company. the vehicle's ignition inadvertently switches off, disabling the airbags, exceeding 300 claims. Litigators are also looking to line up clients that have been been affected by the recall. As a matter of fact if the directors are aware of the potential exposure to litigators and fail to recall it that's fraudulent financial reporting.

Required

a) Explain the differences between accruals, provisions and contingent liability in context of the above case (6 Marks)

b) By discussion the liability recognition criteria, explain to the management why there is need to create provision in the above case (6 Marks)

C) Outline and explain the various uncertainties (non -ideal environment that the management should consider when making estimate for

possible atrounting provisions in the above case. (8 Marks)

d) Explain why the management should consider the going concern in the above case and state other factors that must be consider in evaluation the ability of the company to continue as a going concern. (7 Marks)

e) Explain agency theory of accounting and ethical theory of accounting in the context of the above case (3 Marks)