During a Review of the Financial Statements of a Nonpublic

question 72

Multiple Choice

During a review of the financial statements of a nonpublic entity, the CPA finds that the financial statements contain a material departure from generally accepted accounting principles. If management refuses to correct the problem, the CPA should:

• A)disclose the departure in a separate paragraph of the report.
• B)issue an adverse opinion.
• C)attach a footnote explaining the effects of the departure.
• D)issue a compilation report.

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Definitions:

Comparative Advantage

The ability of a country, individual, company, or region to produce a particular good or service at a lower opportunity cost than others.

Absolute Advantage

The ability of a country or firm to produce a greater quantity of a good, product, or service than competitors, using the same amount of resources.

Production Costs

The total expense incurred in manufacturing a product or providing a service, including materials, labor, and overhead.

Comparative Advantage

Comparative advantage is the economic principle that a country should specialize in producing and exporting goods in which it has the lowest opportunity cost compared to others.