Cravens Was Asked to Perform the First Audit of a Wholesale

question 44

Multiple Choice

Cravens was asked to perform the first audit of a wholesale business that does not maintain perpetual inventory records. Cravens has observed the current inventory but has not observed the physical inventory at the previous year-end date and concludes that the opening inventory balance, which is not auditable, is a material factor in the determination of cost of goods sold for the current year. Cravens will probably

• A) Decline the engagement.
• B) Express an unqualified/unmodified opinion on the balance sheet and income statement except for inventory.
• C) Issue a disclaimer of opinion.
• D) Issue an adverse opinion.

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Definitions:

Business Meal

A meal shared among business partners or colleagues where the primary purpose is to discuss professional matters.

Mobile Phone

A handheld electronic device that enables users to make telephone calls, send text messages, and access the internet.

Urgent Calls

Urgent calls are communications that require immediate attention or action, often marked by a high priority in professional or personal settings.

Summarizing Conclusions

The act of briefly restating the main findings or outcomes of a discussion, analysis, or research in a concise form.