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.
Ans: b. Express a qualified opinion.
You might also like to view...
Answer the following statement(s) true (T) or false (F)
1. For a given interest rate, the future value of $100 increases with the passage of time. Thus, the longer the period of time, the greater the future value. 2. The greater the potential return on an investment and the longer the period of time, the higher the present value. 3. Everything else being equal, the higher the interest rate, the higher the future value. 4. The future value increases with increases in the interest rate or the period of time funds are left on deposit. 5. Everything else being equal, the higher the discount rate, the higher the present value.
Which of the following statements is false regarding the formation of a principal-agent relationship?
A. An agency must have a legal purpose. B. An agency may be implied in law, even if the principal did not intend to grant authority. C. The test for agency is objective. D. Each element of a contract must be present for the relationship to exist.