"The company has not made an allowance for bad debts for an account deemed uncollectible in the amount of $250,000 as of the year ended December 31,2016." is an example of a ________.
A)GAAP change requiring a qualified opinion
B)scope limitation
C)departure from GAAP
D)report with a disclaimer of opinion

Question

Quizplus · Accepted Answer

This statement describes a departure from GAAP, as the company has not followed the guideline of making an allowance for bad debts. This may affect the accuracy of the financial statements and result in a material misstatement, which is a departure from GAAP. As a result, the auditor should issue a qualified or adverse opinion depending on the materiality of the departure. However, the given statement alone does not require the auditor to issue any opinion.

"The Company Has Not Made an Allowance for Bad Debts