A Scope Limitation Sufficient to Preclude an Unqualified Opinion Always

question 63

Multiple Choice

A scope limitation sufficient to preclude an unqualified opinion always will result when management

• A) Prevents the auditor from reviewing the working papers of the predecessor auditor.
• B) Engages the auditor after the year-end physical inventory is completed.
• C) Requests that certain material accounts receivable not be confirmed.
• D) Refuses to provide a representation letter acknowledging its responsibility for the fair presentation of the financial statements in conformity with GAAP.

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Definitions:

Expense

is an outflow of cash or other valuable assets from a person or company to another entity, representing the cost of operations or services rendered.

Debit Columns

Sections in financial statements where increases in assets or expenses or decreases in liabilities, equity, or income are recorded.

Credit Columns

Sections in accounting ledgers or financial statements that record amounts which reduce the balance of an account.

Net Loss

A financial situation where a company's expenses exceed its revenues during a specific period, leading to a negative net income on the income statement.