An auditor who is unable to form an opinion on a new client's opening inventory balances may issue an unmodified opinion on the current year's
A)Income statement only.
B)Statement of cash flows only.
C)Balance sheet only.
D)Statement of changes in shareholders' equity only.

Question

Quizplus · Accepted Answer

The auditor can issue an unmodified opinion on the current year's balance sheet (which includes the opening inventory balances) as long as the inventory balances do not have a material effect on the overall financial statements. The auditor cannot issue an opinion on the income statement or statement of cash flows without considering the impact of the opening inventory balances. The statement of changes in shareholders' equity may be affected by the inventory balances, so an unmodified opinion cannot be issued on that statement alone.

An Auditor Who Is Unable to Form an Opinion on a New