An Auditor Concludes That There Is Substantial Doubt About an Entity's

question 163

Multiple Choice

An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. The entity's financial statements adequately disclose its financial difficulties. Under these circumstances, the auditor's report is required to include an emphasis-of-matter paragraph that specifically uses the phrase(s) . $\begin{array}{llc}& \text { "Except for the Effects of}& \text {"Possible Discontinuance}\\& \text {Such Adjustments"}& \text {of the Entity's}\\& \text {Operations"}\\\end{array}$
A. $\begin{array}{llc}&&& \text { Yes } &&&&&&&&&& \text { Yes } \\\end{array}$
B. $\begin{array}{llc}&&& \text { Yes }&&&&&&&&&& \text { No } \\\end{array}$
C. $\begin{array}{llc}&&& \text { No } &&&&&&&&&& \text { Yes } \\\end{array}$
D. $\begin{array}{llc}&&& \text { No } &&&&&&&&&& \text { No }\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D

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Definitions:

Easement

A right to use the property of another, usually for a particular purpose.

Impossible Living

A term not generally recognized in standard discourse; appears to refer to conditions under which normal life or habitation is extremely difficult.

Lease Terminated

The end of a lease agreement, either through mutual agreement, by reaching its natural expiration, or through early termination under specific conditions.

Periodic Tenancy

A lease that automatically renews at the end of each rent payment period until notice to terminate is given.