If a Material Misstatement Is Discovered in Previous Periods Financial

question 31

Multiple Choice

If a material misstatement is discovered in previous periods financial statements on which the auditor previously expressed an unqualified opinion and the previous statements are not revised, but the comparatives have been properly accounted for and disclosed in accordance with an identified financial reporting framework in the current years statements, then the auditor should express what sort of opinion?

• A) disclaimer of opinion.
• B) adverse opinion.
• C) unqualified opinion
• D) qualified opinion.

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Definitions:

Warrants

Warrants are a type of security that gives the holder the right to purchase a company’s stock at a specific price until the expiration date.

Long-term Call Options

Financial derivatives granting the holder the right, but not the obligation, to buy a security at a fixed price within a specific long-term period.

Exercise Price

The price stated in the option contract at which the security can be bought (or sold). Also called the strike price.

Common Stock

A form of corporate equity ownership, representing a claim on a portion of the company's profits and a right to vote on management decisions.