Which of the Following Modifications of the Auditors' Report Does

question 57

Multiple Choice

Which of the following modifications of the auditors' report does not include an additional paragraph?

• A)The report is qualified because the financial statements contain a material departure from generally accepted accounting principles.
• B)The report includes an emphasis of a matter.
• C)The audit report of a nonpublic company indicates a division of responsibility between two CPA firms.
• D)The report is qualified because the scope of the auditors' work was limited.

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Definitions:

Profitable Use

The utilization of resources or assets in a manner that generates a significant positive return or profit.

Insufficient Capacity

A situation where a company does not have enough resources, such as manpower or machinery, to meet current or future production demands.

Contribution Margin

The difference between sales revenue and variable costs, indicating the amount contributing to covering fixed costs and profit.

Variable Cost

A cost that changes in proportion to the level of output or activity in a business.