For Which of the Following Events Would an Auditor Issue

question 42

Multiple Choice

For which of the following events would an auditor issue a report that does not include any reference to consistency?

• A) A change in the method of accounting for inventories.
• B) A change from an accounting principle that is not generally accepted to one that is generally accepted.
• C) A change in the service life used to calculate depreciation expense.
• D) A change in accounting principle without reasonable justification from management.

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Definitions:

Private Placement

The sale of securities to a relatively small number of select investors as a way of raising capital.

Angels

Affluent individuals who provide capital for business start-ups, often in exchange for convertible debt or ownership equity.

Wealthy Individuals

Affluent persons with significant disposable income, often targeted by companies or fund managers as potential investors in ventures or high-value products.

Formal Investors

Institutional or accredited investors who officially engage in funding businesses, typically through structured deals involving equity or debt financing.