The Auditor Issues an Adverse Opinion When

question 80

Multiple Choice

The auditor issues an adverse opinion when

• A)the auditor has sufficient appropriate audit evidence and concludes that the misstatements to the financial statements are material,but not pervasive
• B)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be both material and pervasive
• C)the auditor is unable to obtain sufficient appropriate evidence,but the auditor concludes that the possible effects of the misstatement could be material,but not pervasive
• D)the auditor has reasonable evidence to determine that the financial statements are not free from material misstatement
• E)the auditor has sufficient evidence to determine that the financial statements are not free from material misstatement

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Definitions:

Financial Flexibility

The ability of a company to adapt its financial policies and make decisions to ensure survival and growth.

Issuing Stock

This refers to the process by which a company sells new shares to investors in order to raise capital.

Accounting Science

The discipline that studies the concepts, rules, and processes followed in accounting to collect, analyze, verify, and report financial information.

Financial Fraud

Intentional acts of deception involving financial transactions for the purpose of personal gain, such as embezzlement, insider trading, and fraudulent financial reporting.