Which of the following can cause specification bias in a regression model?
A) omission of variables uncorrelated to the independent variables
B) omission of variables correlated to the independent variables
C) inclusion of autocorrelated variables
D) inclusion of an error term
B
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Trade receivables include notes receivable and advances to officers and employees.
a. true b. false
On January 2, Year 2, the Retail Auto Parts Co. received a notice from its primary suppliers the effective immediately all wholesale prices would be increased 10%. On the basis of the notice, Retail Auto Parts Co. revolved its December 31, Year 1, inventory to reflect higher costs. The inventory constituted a material proportion total assets. However, the effect of the revaluation was material to current assets but not to total assets or net income. In reporting on the company's financial statements for the year ended December 31, Year 1, in which inventory is valued at the adjusted amounts, the auditor would most likely
a. Express an unmodified opinion provided the nature of the adjustment and the amounts involved are disclosed in notes. b. Express a qualified opinion. c. Disclaim an opinion. d. Express and adverse opinion.