Auditors Who Are Reporting on Financial Statements That Contain a Material

question 124

Multiple Choice

Auditors who are reporting on financial statements that contain a material departure from generally accepted accounting principles should

• A)express a qualified or adverse opinion.
• B)not modify the Opinion on the Financial Statements section of the report as long as the departure is adequately disclosed in a footnote.
• C)disclaim an opinion on the financial statements.
• D)express a qualified opinion or disclaimer of opinion.

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Definitions:

Counterparty Credit Risk

The risk that the other party in a financial transaction might default on their contractual obligations.

Bull Money Spread

An options strategy used by investors to profit from the moderate rise in the price of a stock.

Puts

Options contracts giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Contract

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a predetermined price within a specified time period.