Question

1. A prior period adjustment should be reported as an adjustment to the retained earnings balance at the beginning of the period in which the adjustment was made.

True or False

2. A clean audit opinion is not the same as an unmodified opinion.

True or False

3. Analyzing a company's performance should take into account conditions peculiar to the industry and the general economic conditions.

True or False

Answer 1

Part 1

True

For a prior period adjustment, the carrying amounts of any impacted assets or liabilities are offset against the beginning retained earnings balance in that same accounting period

Part 2

False

A clean audit opinion is the same as an unmodified opinion and is issued when financial statements prepared and issued are in conformity with GAAP in all significant aspects.

Part 3

True

The analysis and interpretation of financial should considered the industrial environment and economic environment.