An audit of the Wynning Company,a diamond mining company,brings to light the fact that its equipment (a material account on the balance sheet)has been marked up to the owners' expectation of market values.Such a situation will most likely result in which type of report?
A)Disclaimer.
B)Review.
C)Adverse.
D)Unqualified with explanatory language.

Question

Quizplus · Accepted Answer

The fact that the equipment has been marked up to the owners' expectations of market values means that the financial statements are not presenting a true and fair view of the company's financial position. This is a violation of Generally Accepted Accounting Principles (GAAP), and therefore, the auditor is likely to issue an adverse report.

An Audit of the Wynning Company,a Diamond Mining Company,brings to Light