When Financial Statements of a Prior Period Are Presented on a Comparative

question 26

Multiple Choice

When financial statements of a prior period are presented on a comparative basis with financial statements of the current period,the continuing auditor is responsible for:

• A)Expressing dual dated opinions.
• B)Updating the report on the previous financial statements only if there has not been a change in the opinion.
• C)Updating the report on the previous financial statements only if the previous report was qualified and the reasons for the qualification no longer exist.
• D)Updating the report on the previous financial statements regardless of the opinion previously issued.

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Definitions:

Working Capital

An indicator of a company's short-term financial health, calculated as current assets minus current liabilities.

Quick Ratio

A liquidity measure that indicates a company's ability to pay its short-term liabilities with its most liquid assets, excluding inventory.

Current Ratio

Current Ratio is a liquidity ratio that measures a company’s ability to pay short-term obligations or those due within one year, calculated by dividing current assets by current liabilities.

Contingent Liabilities

Potential liabilities that may or may not become actual liabilities, depending on the outcome of uncertain future events.