If a Public Company Issues Financial Statements That Purport to Present

question 4

Multiple Choice

If a public company issues financial statements that purport to present its financial position and results of operations but omits the statement of cash flows, the auditor ordinarily will express a(an)

• A) Disclaimer of opinion.
• B) Qualified opinion.
• C) Review report.
• D) Unqualified opinion with a separate explanatory paragraph.

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Definitions:

Turnover

The rate at which inventory or assets are replaced through sales or use within a given period.

Net Operating Income

A company’s income after operating expenses are subtracted, but before income taxes and interest are calculated.

Residual Income

The amount of income that an individual has after all personal debts, including the mortgage, have been paid.

Minimum Required Rate

The lowest rate of return or discount rate that a project must exceed to be considered as a viable option.