"As described in Note 5 to the financial statements,General Express changed its statistical method of computing product warranty expense for the year ended December 31,2017.." is an illustration of a
A)Consistency change requiring a qualified opinion.
B)Scope limitation.
C)Departure from generally accepted accounting principles
D)Report with a consistency modification.

Question

Quizplus · Accepted Answer

The statement is indicating that General Express changed the method of computing product warranty expense, which is a change in accounting policy. However, this change was applied consistently and is disclosed in the financial statements. Therefore, it would not require a qualified opinion, scope limitation, or departure from GAAP. Instead, the auditor's report would include a consistency modification to reflect the change in accounting policy.

"As Described in Note 5 to the Financial Statements,General Express