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:

Common Fixed Costs

Common fixed costs refer to expenses that remain constant for a business over a period, regardless of the level of production or sales activity.

Joint Products

Products that are generated together from the same raw materials or production process, where the costs are difficult to allocate to each product individually.

Split-off Point

marks the stage in a production process where multiple products are generated from common inputs, necessitating allocation of costs among the products.

Avoidable Cost

A cost that can be eliminated (in whole or in part) by choosing one alternative over another in a decision. This term is synonymous with relevant cost and differential cost.