Financial Statements Are Usually Prepared on the Going Concern Basis

question 20

Multiple Choice

Financial statements are usually prepared on the going concern basis.The auditor is required by ASA 570 (ISA 570) to assess the risk of going concern problems at which stage of the audit?

• A)During the final review.
• B)The planning stage.
• C)The planning stage and again during the final review.
• D)ASA 570 (ISA 570) does not require the assessment of the risk of going concern problems, this is left to the directors.

---

Definitions:

Prefrontal Cortex

The front part of the frontal lobes of the brain, implicated in complex cognitive behavior, personality expression, decision making, and moderating social behavior.

Limbic System

A complex system of nerves and networks in the brain, involving several areas near the edge of the cortex concerned with instinct and mood. It controls basic emotions (such as fear and pleasure) and drives (such as those for food and sex).

Basal Ganglia

The basal ganglia are a group of nuclei in the brain involved in controlling movement and coordination, as well as aspects of learning and emotional response.

Temporal Lobe

An area in the cerebral cortex tasked with analyzing sounds and storing memories.