If Conclusion Is Drawn That There May Be a Going

question 162

Multiple Choice

If conclusion is drawn that there may be a going concern problem, which of the following should the auditor do?

• A) Withdraw from the engagement.
• B) Issue a qualified or adverse opinion.
• C) Identify and assess management's plan to overcome the problem.
• D) Communicate this fact with management that is one level above the controller.

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Definitions:

Temporary Accounts

Accounts that track transactions within a fiscal period and are reset to zero at the start of the next period, including revenues, expenses, and dividends.

Owner's Drawings

Withdrawals of a company's earnings by the owner for personal use, affecting the owner’s equity account in a separately held business.

Accumulated Depreciation

This accounts for the total depreciation expenses charged against a fixed asset since it was put into use, reflecting the decrease in value of the asset.

Income Summary

An account used in the closing process that summarizes revenues and expenses for a period, determining the net income or loss.