When Reporting on Comparative Financial Statements, Auditors Ordinarily Should Modify

question 5

Multiple Choice

When reporting on comparative financial statements, auditors ordinarily should modify their previously expressed opinion on the prior years' financial statements if the

• A)prior years' financial statements are restated to conform with generally accepted accounting principles.
• B)auditors were predecessor auditors who have been requested by a former client to reissue the previous report.
• C)prior years' opinions were unmodified and the opinion on the current year's financial statements is modified due to a lack of consistency.
• D)prior years' financial statements are restated following an acquisition in the current year.

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Definitions:

Firm Sales

The total volume or value of all products sold by a company during a specific period.

Pure Competitors

Firms operating in a pure (or perfect) competition market, characterized by many buyers and sellers of a homogeneous product and freedom of entry and exit.

R&D

R&D stands for research and development, the process of investing time and capital in developing new products, processes, or services, or improving existing ones.

Competitive Industries

Industries in which multiple firms compete, often characterized by high levels of competition which drive innovation and efficiency.