On 2 July 20X0 Pretty Paint Ltd received a notice from its primary suppliers that all wholesale prices would be increased by 10%, to be effective immediately. On the basis of the notice Pretty Paint Ltd revalued its 30 June 20X0
Inventory to reflect the higher costs. The details of the adjustment were disclosed in the notes to the financial report.The inventory adjustment was material. The auditor of the 30 June 20X0 financial report would issue:

Question

Quizplus · Accepted Answer

The revaluation of inventory based on future price changes is not in accordance with accounting standards, which require inventory to be valued at the lower of cost or net realizable value. This misstatement would lead to a qualified opinion due to the material misstatement in the financial statements.

On 2 July 20X0 Pretty Paint Ltd Received a Notice