If a Misstatement Is Immaterial Relative to the Financial Statements

question 43

Multiple Choice

If a misstatement is immaterial relative to the financial statements of the entity for the current period and is not expected to have a material effect in future periods, it is appropriate to issue

• A) an unqualified opinion.
• B) a qualified opinion.
• C) an adverse opinion.
• D) a disclaimer of opinion.

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Definitions:

Non-cash Assets

Items of value that a company owns but cannot be easily converted to cash, such as real estate, equipment, and patents.

Liabilities

Future sacrifices of economic benefits that an entity is obliged to make to other entities due to past transactions or other past events.

Store Equipment

Store equipment encompasses all the fixed assets used in a retail store for display, storage, and operations, including shelving units, cash registers, and refrigeration systems.

Loss on Realization

Occurs when the proceeds from the sale of an asset are less than its carrying value.