Resources ❯ Accounting Terms

Clean Opinion

[kleen uh-PIN-yuhn]

What is the definition of Clean Opinion?

An audit opinion that is not qualified for any material scope restrictions nor departures from Generally Accepted Accounting Principles (GAAP), indicating that the financial statements present fairly the financial position and performance of the entity in accordance with GAAP. Also known as an unqualified opinion.

Using Clean Opinion in an Example

In an annual report, a clean opinion from the auditors suggests that the financial statements of the company are free from material misstatements and are in compliance with GAAP, providing assurance to investors and stakeholders about the accuracy of the financial records.

Using Clean Opinion in a sentence

The company was pleased to receive a clean opinion from their auditors, which helped boost investor confidence.

Related Terms

Cost Recovery Method

A method of revenue recognition in which profits are recognized only after all costs incurred are completely recovered. This method is typically used when the total amount of collections is highly uncertain.

Cost Segregation

The process of identifying and reclassifying personal property assets that are grouped with real property assets for depreciation purposes. This process allows the personal property assets to be depreciated over a shorter recovery period than the real property assets.

Cost of Capital

The rate of return that a business must earn on its investment projects to maintain its market value and attract funds. It represents the opportunity cost of making a specific investment, instead of investing the same funds in an alternative venture with equivalent risk.

Cost of Goods Sold

Cost of Goods Sold (COGS) represents the direct costs associated with the production of goods sold by a company. This includes the cost of the raw materials and labor used in the production of these goods.

Coupon

The interest rate on a debt security that the issuer promises to pay to the holder until maturity, expressed as an annual percentage of the face value.

Coupon Bond

A bond that is typically not registered with the issuing corporation and carries detachable coupons. These coupons state the amount of interest due and the payment date, which the holder must present to receive interest payments.

Coverdell Education Savings Account (Education IRA)

A tax-exempt trust exclusively established for the purpose of paying the qualified education expenses of the designated beneficiary, which can include higher education costs as well as elementary and secondary education expenses.

Credit

In double-entry bookkeeping, a credit is an entry on the right side of an account ledger that represents the increase in a liability, revenue, or equity account, or the decrease in an asset or expense account.

Credit Agreement

A legally binding contract in which one party provides funds or resources to another with the agreement that the receiver will repay the amount on a future date, potentially with additional interest or fees.

Credit Balance

A balance remaining after accounting entries that represents a liability or income to the entity, often indicating the amount that the entity owes to others or has in surplus.

Creditor

A party that loans money or other assets to another party, typically expecting repayment with terms agreed upon by both parties.

Current Asset

An asset that is expected to be converted into cash, sold, or consumed in operations within one operating cycle or within a year if more than one cycle is completed annually.

Current Liability

An obligation whose liquidation is expected to require the use of existing resources classified as current assets, or the creation of other current liabilities, typically due within one year.

Current Ratio

A financial metric used to evaluate a company's ability to pay off its short-term liabilities with its short-term assets. The current ratio is calculated by dividing the company's current assets by its current liabilities.

Current Value

The present worth of an asset, calculated either based on its current market price compared to its historical cost, or by discounting the future revenue stream of the asset using compound interest principles.

Current Yield

The annual interest received from a bond expressed as a percentage of its current market price.

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