When reporting on financial statements that include only summarized totals of account balances, the auditors' conclusion should state whether the information in the condensed financial statements is
A)complete with respect to disclosures required by the SEC.
B)fairly stated, in all material respects, in accordance with generally accepted accounting principles.
C)consistent, in all material respects, with the prior years' condensed financial statements.
D)fairly stated, in all material respects, in relation to the complete financial statements.

Question

Quizplus · Accepted Answer

When financial statements are condensed, they do not include all the detailed information that would be available in the complete financial statements. Therefore, the auditors' conclusion should state that the condensed financial statements are fairly stated, in all material respects, in relation to the complete financial statements. Choice A is incorrect because the SEC requires specific disclosures that are not necessarily included in condensed financial statements. Choice B is incorrect because it is the standard conclusion for financial statements, but does not specifically address the condensed nature of the statements. Choice C is incorrect because the consistency of the condensed financial statements with prior years is not the primary concern addressed by the auditors' conclusion.

When Reporting on Financial Statements That Include Only Summarized Totals