ACC 492 Week 4 Individual Assignment Multiple Choice Quiz
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1. A CPA found that the company has not capitalized a material amount of leases in the financial statements. When considering the materiality of this departure from GAAP, the CPA would choose between which reporting options?
a. Unqualified opinion or disclaimer of opinion.
b. Unqualified opinion or qualified opinion.
c. Emphasis paragraph with unqualified opinion or an adverse opinion.
d. Qualified opinion or adverse opinion.
2. An auditor determined that the company is suffering financial difficulty and the going concern status is seriously in doubt. Even though the company has placed adequate disclosures in the financial statements, the auditor must choose between which of the following audit report alternatives?
a. Unqualified report with a going-concern explanatory paragraph or disclaimer of opinion.
b. Standard unqualified report or a disclaimer of opinion.
c. Qualified opinion or adverse opinion.
d. Standard unqualified report or adverse opinion.
3. A company accomplished an early extinguishment of debt, and the auditors believe that literal application of SFAS No. 98 would cause recognition of a loss that would materially distort the financial statements and cause them to be misleading. Given these facts, the auditor would probably choose which reporting option?
a. Explain the situation and give an adverse opinion.
b. Explain the situation and give a disclaimer of opinion.
c. Explain the situation and give an unqualified opinion, relying on Rule 203 of the AICPA Code of Professional Conduct.
d. Give the standard unqualified audit report.
4. Which of these situations would require an auditor to append an explanatory paragraph about consistency to an otherwise unqualified audit report?
a. Company changed its estimated allowance for...