Which of These Situations Would Require Auditors to Append an Explanatory

question 78

Multiple Choice

Which of these situations would require auditors to append an explanatory paragraph about consistency to an otherwise unqualified opinion?

• A) Entity changed its estimated allowance for uncollectible accounts receivable.
• B) Entity corrected a prior mistake in accounting for interest capitalization.
• C) Entity sold one of its subsidiaries and consolidated six subsidiaries this year compared to seven last year.
• D) Entity changed its inventory costing method from FIFO to LIFO.

Define and calculate the payback period for investments.

Understand and calculate average payoffs and their significance in decision-making.

Calculate and interpret measures of risk, including variance, standard deviation, and coefficient of variation.

Understand and apply the Sharpe ratio to evaluate investment performance.

---

Definitions:

Borderline Personality Disorder

A mental disorder characterized by unstable moods, behavior, and relationships.

Cognitive-Behavioral Therapy

A form of psychotherapy that treats problems and boosts happiness by modifying dysfunctional emotions, behaviors, and thoughts.

Progress

Forward or onward movement towards a goal, often in the context of recovery or development.

Grams

A metric unit of mass equal to one thousandth of a kilogram, commonly used to measure small quantities of material.