Which of the Following Requires Recognition in the Auditor's Opinion

question 159

Multiple Choice

Which of the following requires recognition in the auditor's opinion as to consistency?

• A) the correction of an error in the prior year's financial statements resulting from a mathematical mistake in capitalizing interest
• B) a change in the estimate of provisions for warranty costs
• C) the change from the cost method to the equity method of accounting for investments in common stock
• D) a change in depreciation method which has no effect on current year's financial statements but is certain to affect future years

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Definitions:

Primary Tax Authority

The most authoritative sources of tax law, including statutes, regulations, and court decisions, which are used to find the legal basis for tax positions.

Statutory

Relating to laws or statutes, often used in the context of rights or obligations that are legally defined.

Judicial

Pertaining to the courts or to the administration of justice.

Tax Liability

The sum of money owed to a tax agency based on earned income, investments, property, and other taxable entities.