2. For each of the situations below, indicate, by letter, thetype of report most likely to be issued. (5points)
A. Unqualified opinion, no modification.
B. Unqualified opinion, modification for consistency.
C. Unqualified opinion, modification for Rule 203.
D. Unqualified opinion, modification for emphasis of amatter.
E. Unqualified opinion, modification for a going-concernuncertainty.
F. Unqualified opinion, modification for going concern.
G. "Except for" qualified opinion.
___ 1. The entity has a lawsuit pending against them. There issignificant uncertainty about the outcome of the lawsuit, whichcould have a significant impact on the viability of the entity.Management has provided adequate disclosure of the lawsuit in thefootnotes accompanying the financial statements.
___ 2. The entity has a lawsuit pending against them. It isprobable that the entity will lose the suit. Management has accruedthe best estimate of the loss and provided adequate disclosure. Itis not expected that this lawsuit will have a significant effect onthe entity's ability to continue as a going concern.
___ 3. The entity has a lawsuit pending against them. It isprobable that the entity will lose the suit. Management has notaccrued the best estimate of the loss, but has provided informationin the footnotes. It is not expected that this lawsuit will have asignificant effect on the entity's ability to continue as a goingconcern.
___ 4. Based on recent analysis of usage, the entity has changedthe useful life of its office equipment from five to four years.This change is reflected in the depreciation amounts computed forthe current year.
___ 5. The entity uses an accounting principle for a class oftransactions that is not acceptable under current GAAP. The entitybelieves, and the auditors concur, that the financial statementswould be misleading if GAAP were to be followed