2. The auditor is most concerned with:

MULTIPLE CHOICE

a. The understatement of liabilities.

b. The overstatement of liabilities.

c. both

d. Neither

4. In which of the following circumstances would an adverse opinion be appropriate?

MULTIPLE CHOICE

a. The client appears not to be a going concern.

b. The auditor is not independent.

c. The client's financial statements "taken as a whole" are totally misleading.

d. The financial statements are not consistent with the prior year.

18. Generally, what is the treatment of a type II subsequent event?

MULTIPLE CHOICE

		a. Disclosure in the financial statements.
		b. Modification of amounts in the financial statements.
		c. No effect on the financial statements.
		d. Issuance of a qualified opinion.

21. Which of the following subsequent events might require an adjustment to the client's financial statements?

MULTIPLE CHOICE

		a. A business combination with a competing company.
		b. Loss of a plant due to a fire.
		c. Litigation pending is settled.
		d. Introduction of a new line of products.