When Auditors Wish to Issue an Unqualified Opinion but Highlight

question 64

Multiple Choice

When auditors wish to issue an unqualified opinion but highlight that the entity changed its method of accounting for software development costs,what type of report modification would be most appropriate?

• A) Identify the change in accounting methods in the introductory paragraph.
• B) Identify the change in accounting methods in the opinion paragraph.
• C) Identify the change in accounting methods in an emphasis-of-matter paragraph.
• D) Identify the change in accounting methods in an other-matter paragraph.

---

Definitions:

WACC

The Weighted Average Cost of Capital is a metric that calculates a company's cost of capital, with each capital category being weighted proportionally.

Capital Budgeting

The process by which investors or managers decide which capital investment projects - like new machinery or expansion plans - to undertake, based on potential profitability and risk analysis.

Opportunity Cost

A cash flow that a firm must forego to accept a project. For example, if the project requires the use of a building that could otherwise be sold, the market value of the building is an opportunity cost of the project.

Overall WACC

A comprehensive measure of a company's cost of capital, incorporating the weighted costs of its equity and debt financing.