Depending on the circumstances, the auditor will issue a (an):
1. Unqualified opinion – The auditors are satisfied that the financial statements “present fairly” the financial position, results of operations, and cash flows and are “prepared in accordance with generally accepted accounting principles.”
2. Qualified opinion – This contains an exception to the standard unqualified opinion, but not of sufficient seriousness to invalidate the financial statements as a whole. Examples of exceptions are (a) unconformity with generally accepted accounting principles, (b) inadequate disclosures, and (c) a limitation or restriction of the scope of the examination.
3. Adverse opinion – This is necessary when the exceptions (a) and (b) above are so serious that a qualified opinion is not justified. Adverse opinions are rare because auditors usually are able to persuade management to rectify problems to avoid this undesirable report.
4. Disclaimer – An auditor will disclaim an opinion if item (c) above applies and therefore insufficient information has been gathered to express an opinion.
b. The principal would have to be due after April 30, 2012 to be considered as a noncurrent asset at April 30, 2011. The accrued interest for eight months (since August 31, 2010) is a current asset at April 30, 2011. Since the principal is due August 31, 2012, additional interest would have to be recorded for the period September 1, 2011 to August 31, 2012.

2. a. Current liabilities are obligations that are expected to be paid within one year or the operating cycle whichever is longer. Accounts payable $15,000 Bonds payable 22,000 Dividends payable 8,000 Total current liabilities $45,000
The notes payable are not classified as current liabilities because they are not due until 2013.

3. a. Inventory pricing is a significant accounting policy which