Question

When comparative financial statements are presented, the fourth standard of reporting, which refers to financial statements taken as a whole, should be considered to apply to the financial statements of the

a. Periods presented plus the one preceding period.
b. Current period only.
c. Current period and those of the other periods presented.
d. Current and immediately preceding period only.

Answer 1

The fourth standard of reporting for comparative financial statements applies to the current period and those of the other periods presented, requiring an auditor to consider all the periods when assessing the fairness and adherence to GAAP.

Step-by-step explanation:

When comparative financial statements are presented, the fourth standard of reporting refers to the financial statements taken as a whole. This means that the consideration should apply to the financial statements of the current period and those of the other periods presented.

Therefore, when assessing whether the financial statements are presented fairly, in all material respects, and whether they adhere to the generally accepted accounting principles (GAAP), the auditor must consider all periods that are being presented. Thus, the correct answer is c. Current period and those of the other periods presented.

When comparative financial statements are presented, the fourth standard of reporting, which refers to financial statements taken as a whole, should be considered to apply to the current period and those of the other periods presented.