Cravens Was Asked to Perform the First Audit of a Wholesale

Multiple Choice

Cravens was asked to perform the first audit of a wholesale business that does not maintain perpetual inventory records. Cravens has observed the current inventory but has not observed the physical inventory at the previous year-end date and concludes that the opening inventory balance, which is not auditable, is a material factor in the determination of cost of goods sold for the current year. Cravens will probably:

A) decline the engagement.
B) express an unqualified opinion on the balance sheet and income statement except for inventory.
C) issue a disclaimer of opinion.
D) issue an adverse opinion.