When Financial Statements Contain a Departure from GAAP, the Auditors

question 39

Multiple Choice

When financial statements contain a departure from GAAP, the auditors should explain the unusual circumstances in a separate paragraph and express an opinion that is

• A)unmodified.
• B)qualified.
• C)adverse.
• D)qualified or adverse, depending on the overall materiality and pervasiveness of the GAAP departure.

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Definitions:

Equilibrium Price

The price point at which the supply of a good matches its demand in the market.

Economic Impact

The effect of an event, policy, or business activity on the economy of a specific area, ranging from local to global.

Per-apple Tax

A unit tax applied specifically to the sale of apples, affecting their market price per unit.

Imported Apples

Apples that are brought into one country from another to be sold in the domestic market.