When Reporting on Comparative Financial Statements,auditors Ordinarily Should Modify Their

question 41

Multiple Choice

When reporting on comparative financial statements,auditors ordinarily should modify their previously expressed opinion on the prior years' financial statements if the

• A)Prior years' financial statements are restated to conform with generally accepted accounting principles.
• B)Auditors were predecessor auditors who have been requested by a former client to reissue the previous report.
• C)Prior years' opinions were unmodified and the opinion on the current-year's financial statements is modified due to a lack of consistency.
• D)Prior years' financial statements are restated following an acquisition in the current year.

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Definitions:

Speculative Reasons

Motivations based on speculation where actions are taken with the expectation of future financial gains or losses.

Equity Method Investments

Investments in which the investor has significant influence over, but not full control or ownership of, another company, requiring recognition of its share of the investee's profits or losses.

Marketable Stock Securities

Financial instruments that represent ownership in companies or rights to ownership, easily bought and sold in public markets.

Short-Term Investment

A short-term investment is an asset that is expected to be converted into cash or sold within a short period, typically one year, to generate income.