Under Which of the Following Sets of Circumstances Might an Auditor

question 18

Multiple Choice

Under which of the following sets of circumstances might an auditor disclaim an opinion?

• A)There are significant uncertainties affecting the financial report.
• B)There has been a material change between periods in the method of the application of accounting principles.
• C)The principal auditor decides to make reference to the report of another auditor who disclaimed an opinion on the audit of a subsidiary.The subsidiary contributed 6 per cent of operating revenue and profit but very little in other aspects.
• D)The financial report contains a departure from generally accepted accounting principles, the effect of which is material.

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Definitions:

Corporation's Assets

The resources owned by a corporation that have economic value and can be used to meet its financial obligations.

Preferred Stockholders

Preferred stockholders are investors who own shares of a company's preferred stock, which often provides fixed dividends and priority over common stockholders in asset liquidation.

Current-Year Dividends

The dividends paid by a company to its shareholders from its earnings of the current fiscal year.

Common Stockholders

Owners of common stock in a corporation, who have voting rights and may receive dividends, but are typically last in line to receive assets in the event of liquidation.