In Which of the Following Circumstances Would an Auditor Most

question 840

Multiple Choice

In which of the following circumstances would an auditor most likely add an explanatory paragraph to the standard report while not affecting the auditor's unqualified opinion?

• A) The auditor is 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 are unreasonable.
• D) Certain transactions cannot be tested because of management's records retention policy.

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Definitions:

Dividend Yield

A measure of financial performance showing the annual dividends issued by a company relative to its stock price.

Stock Depreciates

Occurs when the market value of a stock decreases over time due to various factors such as poor company performance or market downturns.

Dual Class Stock

A corporate structure where two or more classes of shares are issued, with different voting rights and dividend payments, typically used to retain control among a select group of shareholders.