Under Which of the Following Circumstances Would a Disclaimer of Opinion

question 25

Multiple Choice

Under which of the following circumstances would a disclaimer of opinion be appropriate?

• A) The client refuses to allow the auditor to review the minutes of the board of director's meetings.
• B) The financial statements fail to contain adequate disclosure of related party transactions.
• C) The auditor is engaged during the year and is unable to observe opening physical inventories which are material.
• D) The auditor has identified illegal payments to foreign officials made by the client's management.

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Definitions:

Price-Earnings Ratio

Price-earnings ratio is a valuation metric comparing a company's current share price relative to its per-share earnings, used to gauge if a stock is over or undervalued.

Earnings Per Share

A measure of a company's profitability, calculated as the profit available to common shareholders divided by the average number of common shares outstanding.

Working Capital

The variance between a business's present assets and its present debts, which demonstrates the firm's liquidity.

Common Stock

A type of equity security that represents ownership in a corporation, with rights to vote on corporate matters and receive dividends.