Which One of the Following Would the Auditor Consider to Be

question 13

Multiple Choice

Which one of the following would the auditor consider to be an indication of a potential going-concern problem?

• A)Loss of the controller to a competitor.
• B)Improper reporting of internal controls by management.
• C)Adverse key financial ratios.
• D)Large increase to sales in the month previous to year-end.

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Definitions:

Adjustment Heuristic

A rule of thumb where an initial estimate is adjusted based on additional information or analysis.

Cognitive Bias

A systematic pattern of deviation from norm or rationality in judgment, where inferences about other people and situations may be drawn in an illogical fashion.

Availability Heuristic

A decision-making heuristic in which our estimates of frequency or probability of events are based on how easy it is to find examples.

Framing Effect

The influence of wording, or the context in which information is presented, on decision making.