In Order to Assess If a Company Is a Going

question 62

Multiple Choice

In order to assess if a company is a going concern,the auditor can calculate which of the following ratios during the audit planning and compare with previous years and successful companies in the industry?

• A)debt to equity ratio.
• B)accounts receivable turnover ratio.
• C)percent of interest expense to sales.
• D)inventory turnover ratio.

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Definitions:

Durable Items

Goods or products designed to last for a long period without frequent replacement, typically including appliances, cars, and furniture.

Plant Cover

The layer of vegetation that covers the ground, which can reduce soil erosion and provide habitat for wildlife.

Transpiration

Evaporation of water from aboveground plant parts.

Polar Latitudes

Regions near the poles of the Earth, characterized by extreme cold and seasonal variations in daylight.