A Disclaimer of Opinion Is Issued Whenever the Auditor

question 3

Multiple Choice

A disclaimer of opinion is issued whenever the auditor:

• A) believes that some material part of the financial report is not presented fairly.
• B) believes that the overall financial report is not presented fairly.
• C) has determined that the financial report is presented fairly.
• D) has been unable to obtain sufficient appropriate audit evidence on which to base the opinion, and the possible effects on the financial report could be both material and pervasive.

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Definitions:

Profit

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Contango

A situation in futures trading where the future price of a commodity is higher than the spot price, often indicating expectations of rising prices.

Natural Hedgers

Entities or individuals who inherently have an opposite risk exposure compared to their needed market position, allowing them to hedge their risks without having to use derivative products.

Backwardation

Backwardation is a market condition in which futures prices are lower in the distant delivery months than in the near delivery months, often indicating a shortage of the commodity in the spot market.