If an Entity's External Auditor Expresses an Unmodified Opinion as a Result

question 7

Multiple Choice

If an entity's external auditor expresses an unmodified opinion as a result of the audit of the entity's financial report, readers of the auditor's report can assume that:

• A)the entity is financially sound and the financial report is accurate.
• B)the external auditor found no irregularities.
• C)all material disagreements between the entity and the external auditor about the application of accounting principles were resolved to the satisfaction of the auditor.
• D)the internal control structure is effective.

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Definitions:

Property Taxes

Levies imposed by local governments on real estate properties, calculated based on the value of the property.

Opportunity Costs

Sacrificing potential profits from other possibilities when a certain option is selected.

Equity Capital

Funds raised by a company in exchange for a share of ownership in the company, often through the sale of stock.

Depreciation

The process of allocating the cost of a tangible or physical asset over its useful life, reflecting the decrease in value over time.