When the Auditors Cannot Satisfy Themselves as to the Accuracy

question 62

True/False

When the auditors cannot satisfy themselves as to the accuracy of ending inventory and a material misstatement may exist,they normally may still give an unmodified (unqualified)opinion on the client's income statement.

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Definitions:

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely or by unlimited quantity to any change in price, represented graphically as a horizontal line.

Quantity Demanded

The amount (number of units) of a product that a household would buy in a given period if it could buy all it wanted at the current market price.

Breaks Even

Achieves a situation where there is no profit or loss, synonymous with the concept of the break-even point but phrased differently.

Perfectly Competitive

Describes a market structure where no single buyer or seller has market power, products are homogeneous, information is freely available, and there is free entry and exit of firms.