When a Material Uncertainty Exists,the Auditor Must

question 21

Multiple Choice

When a material uncertainty exists,the auditor must

• A)disclose it in the audit report.
• B)first determine the materiality of the item and whether adequate disclosure is included in the financial statements.
• C)issue a disclaimer of opinion.
• D)issue a modified opinion.

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Definitions:

Cash Flow Timeline

A visual representation that shows the schedule of inflows and outflows of cash within a business over a specific period.

Shortage Costs

Expenses incurred from the unavailability of inventory or resources, leading to missed sales or production delays.

Carrying Costs

The expenses incurred by holding inventory, including storage, insurance, and taxes.

Current Assets

Assets owned by a company that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of the business, whichever is longer.