Restrictions Imposed by an Entity Prohibited the Observation of Physical

question 65

Multiple Choice

Restrictions imposed by an entity prohibited the observation of physical inventories,which accounted for 35% of total assets.Alternative auditing procedures were not feasible,although the auditors were able to examine satisfactory evidence for all other items in the financial statements.The auditors would most likely express

• A) a qualified opinion on the entity's financial statements, referring to a departure from generally accepted accounting principles.
• B) a disclaimer of opinion on the entity's financial statements.
• C) an unmodified opinion on the entity's financial statements with an additional paragraph.
• D) an unmodified opinion on the entity's financial statements with a modification of the Auditor's Responsibility section.

---

Definitions:

Administrative Expenses

Administrative expenses are the costs related to the general operation of a business, including items like office supplies, salaries of administrative personnel, and other non-production costs.

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance premiums.

Cost-Plus Methods

Methods of price setting determined by the cost amount per unit plus a markup based on the desired profit per unit.

Selling Price

The amount of money for which a product or service is sold to customers.