"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, 20x1…" 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 describes a change in an accounting policy that affects the consistency of the financial statements. A consistency modification is required when there is a change in an accounting principle or an estimation method that affects the comparability of financial statements. Therefore, a report with a consistency modification is needed, not a qualified opinion, scope limitation or departure from generally accepted accounting principles.

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