The Predecessor Auditor,after Properly Communicating with the Successor Auditor,has Reissued

question 42

Multiple Choice

The predecessor auditor,after properly communicating with the successor auditor,has reissued a report because the audit client desires comparative financial statements.The predecessor auditor's report should make

• A) No reference to the report or the work of the successor auditor.
• B) Reference to the work of the successor auditor in the scope paragraph.
• C) Reference to both the work and the report of the successor auditor in the opinion paragraph.
• D) Reference to the report of the successor auditor in the scope paragraph.

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Definitions:

Variable Costing

An accounting method that only considers variable costs (costs that fluctuate with production levels) in the calculation of product cost.

Absorption Costing

A costing approach that encompasses all costs associated with production, including direct materials, direct labor, and all overhead costs, both variable and fixed, in the unit cost of a product.

Ending Inventory

The total value of all unsold goods a company has at the end of an accounting period.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the basic profitability of the products or services sold.