When Analyzing the Various Types of Audit Reports

question 54

Multiple Choice

When analyzing the various types of audit reports,

• A) the unmodified opinion with an emphasis-of-matter paragraph is the most common type of report.
• B) companies will generally make the appropriate changes to their accounting records to avoid a qualification by the auditor.
• C) management is more concerned about a qualified report than a disclaimer report.
• D) an adverse report is issued when the auditor is unable to form an opinion on the financial statements.

---

Definitions:

Gain On Sale

The profit realized from the sale of an asset when the selling price exceeds its book value.

Indirect Method

A method for creating the cash flow statement that involves modifying net income based on balance sheet account variations to compute the operating activities' cash flow.

Accounts Receivable

Money owed to a company by its customers for products or services that have been delivered but not yet paid for.

Accrued Liabilities

Expenses that have been incurred but not yet paid, recognized on the balance sheet for financial reporting purposes.