MULTIPLE CHOICE PROBLEMS Audit opinions cannot be classified as which of the fol
ID: 442965 • Letter: M
Question
MULTIPLE CHOICE PROBLEMS
Audit opinions cannot be classified as which of the following?
1. All-purpose
2. Disclaimer of opinion
3. Adverse opinion
4. Qualified opinion
5. Unqualified opinion
From the point of view of analysis, which classification of an audit opinion indicates that the financial
statements carry the highest degree of reliability?
1. Unqualified opinion
2. All-purpose
3. Disclaimer of opinion
4. Qualified opinion
5. Adverse opinion
Which one of the following statements is false?
1. The reliance that can be placed on financial statements that have been reviewed is substantially
less than for those that have been audited.
2. An accountant’s report described as a compilation presents only financial information as
provided by management.
3. A disclaimer of opinion indicates that you should not look to the auditor’s report as an indication
of the reliability of the statements.
4. A review has substantially less scope than an examination in accordance with generally
accepted auditing standards.
The typical unqualified opinion has one paragraph.
If an accountant performs a compilation and becomes aware of deficiencies in the statements,
the accountant’s report characterizes the deficiencies by all but one of the following:
1. Omission of substantially all disclosures
2. Omission of statement of cash flows
3. Accounting principles not generally accepted
4. All of the above
5. None of the above
In addition to the company’s principal financial statements, the Form 10-K and shareholder annual
reports must include all but one of the following:
1. Information on the market for holders of common stock and related securities, including
high and low sales price, frequency and amount of dividends, and number of shares
2. Five-year summary of selected financial data
3. Management’s discussion and analysis of financial condition and results of operations
4. Two years of audited balance sheets, three years of audited statements of income, and two
years of statements of cash flows
5. Disclosure of the domestic and foreign components of pretax income
Which of these is not a suggested problem caused by lack of harmonization of international
accounting standards?
1. Positive effect on the international trade of accounting practice and services
2. A need for employment of key personnel in multinational companies to bridge the ‘‘gap’’ in
accounting requirements between countries
3. Difficulties in reconciling local standards for access to other capital markets
4. Difficulties in accessing capital markets for companies from less developed countries
5. Negative effect on the international trade of accounting practice and services
Which of these organizations has not played a role in the harmonization of international
accounting standards?
1. United Nations
2. Internal Revenue Service
3. International Accounting Standards Board
4. Financial Accounting Standards Board
5. European Economic Community
h. The Form 10-K is submitted to the:
1. American Institute of Certified Public Accountants
2. Securities and Exchange Commission
3. Internal Revenue Service
4. American Accounting Association
MATCH AUDIT with PHRASES
Classifications of Audit Opinions
A. Unqualified opinion
B. Qualified opinion
C. Adverse opinion
D. Disclaimer of opinion
Phrases
1. This opinion states that the financial statements do not present fairly the financial position, results
of operations, or cash flows of the entity, in conformity with generally accepted accounting principles.
2. This type of report is rendered when the auditor has not performed an audit sufficient in scope to
form an opinion.
3. This opinion states that, except for the effects of the matters to which the qualification relates, the
financial statements present fairly, in all material respects, the financial position, results of operations,
and cash flows of the entity, in conformity with generally accepted accounting principles.
4. This opinion states that the financial statements present fairly, in all material respects, the financial
position, results of operations, and cash
Explanation / Answer
Answer: 1 (All-purpose)
Answer: 3 -Disclaimer of opinion
3. Which one of the following statements is false?
Answer: 4. A review has substantially less scope than an examination in accordance with generally accepted auditing standards.
4.The typical unqualified opinion has one paragraph.
If an accountant performs a compilation and becomes aware of deficiencies in the statements,
the accountant’s report characterizes the deficiencies by all but one of the following:
Answer: 1. Omission of substantially all disclosures
5.In addition to the company’s principal financial statements, the Form 10-K and shareholder annual reports must include all but one of the following:
Answer: 1. Information on the market for holders of common stock and related securities, including high and low sales price, frequency and amount of dividends, and number of shares
6. Which of these is not a suggested problem caused by lack of harmonization of international
accounting standards?
Answer: 3. Difficulties in reconciling local standards for access to other capital markets
7.Which of these organizations has not played a role in the harmonization of international
accounting standards?
Answer; 2. Internal Revenue Service
8. The Form 10-K is submitted to the:
Answer: 4. American Accounting Association
MATCH AUDIT with PHRASES
Classifications of Audit Opinions
A. Unqualified opinion –Answer: 1. This opinion states that the financial statements do not present fairly the financial position, results of operations, or cash flows of the entity, in conformity with generally accepted accounting principles.
B. Qualified opinion-Answer: 4. This opinion states that the financial statements present fairly, in all material respects, the financial position, results of operations, and cash
C. Adverse opinion- Answer: 2. This type of report is rendered when the auditor has not performed an audit sufficient in scope to form an opinion.
D. Disclaimer of opinion- Answer: 3. This opinion states that, except for the effects of the matters to which the qualification relates, the financial statements present fairly, in all material respects, the financial position, results of operations, and cash flows of the entity, in conformity with generally accepted accounting principles.
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