For Which of the Following Events Would an Auditor Issue

question 14

Multiple Choice

For which of the following events would an auditor issue a report that does not include any reference to comparability?

• A)A change in the method of accounting for inventories.
• B)A change from an accounting principle that is not generally accepted to one that is generally accepted.
• C)A change in the service life used to calculate depreciation expense.
• D)A correction of a material misstatement in previously issued financial statements.

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Definitions:

Positive Cash Flow

A situation where the net amount of cash and cash-equivalents being transferred into and out of a business is positive, indicating financial health.

Commercial Banks

Financial institutions that offer a wide range of banking services to individuals and businesses, including deposit accounts, loans, and other financial services.

Commercial Finance Companies

Financial institutions that offer loans to businesses, particularly for equipment or inventory financing.

Leasing Companies

Firms that lease vehicles, equipment, or facilities to businesses or individuals, usually for a fixed period at a specified rate.