In Which of the Following Circumstances Would Auditors Most Likely

question 56

Multiple Choice

In which of the following circumstances would auditors most likely add an explanatory paragraph to the standard report without modifying the opinion on the entity's financial statements?

• A)The auditors are asked to report on the balance sheet, but not on the other basic financial statements.
• B)There is substantial doubt about the entity's ability to continue as a going concern.
• C)Management's estimates of the effects of future events on the entity's financial condition, results of operations, and cash flows are unreasonable.
• D)Certain transactions cannot be tested because of management's records retention policy.

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Definitions:

Single-Factor Designs

Experiments that investigate the effect of one independent variable on one or more dependent variables.

Interaction Effects

The impact on a dependent variable that changes depending on the levels of two or more independent variables.

Factorial Designs

Experimental setups that allow researchers to examine the effects of two or more factors by changing them simultaneously and observing the results.

Independent Variables

Variables in an experiment or model that are manipulated or changed to observe their effects on dependent variables.