In Which of the Following Circumstances Would Auditors Be Most

question 87

Multiple Choice

In which of the following circumstances would auditors be most likely to express an adverse opinion?

• A)The chief executive officer refuses to provide the auditors access to minutes of board of directors' meetings.
• B)Tests of controls show that the entity's internal control is so ineffective that it cannot be relied upon.
• C)The financial statements are not in accordance with generally accepted accounting principles regarding the capitalization of leases.
• D)Information comes to the auditors' attention that raises substantial doubt about the entity's ability to continue as a going concern.

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Definitions:

Prepaid Expense

An expense paid in advance of its due date, recorded as an asset on the balance sheet until the benefits are realized or the service period expires.

Magazine Subscription

A magazine subscription is an agreement to receive or gain access to periodic issues of a magazine over a specified period, usually in return for a payment.

Paid

Refers to the status of an obligation or invoice that has been settled or fulfilled through payment.

Vertical Analysis

An approach to financial statement examination whereby each component is presented relative to a foundational number in the report.