Which of the Following Events Occurring After the Issuance of an Auditor's

question 1008

Multiple Choice

Which of the following events occurring after the issuance of an auditor's report most likely would cause the auditor to make further inquiries about the previously issued financial statements?

• A) A technological development that could affect the entity's future ability to continue as a going concern.
• B) The discovery of information regarding a contingency that existed before the financial statements were issued.
• C) The entity's sale of a subsidiary that accounts for 30% of the entity's consolidated sales.
• D) The final resolution of a lawsuit explained in a separate paragraph of the auditor's report.

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Definitions:

Allocative Efficiency

A state of resource allocation where goods and services are distributed according to consumer preferences, maximizing overall social welfare.

Economically Inefficient

A condition where resources are not utilized in the best possible manner, leading to potential waste or losses in terms of welfare or output.

Average Total Cost

The total cost of production divided by the total quantity produced, representing the per-unit cost of production.

Marginal Cost

Refers to the increase in total production costs resulting from the production of one additional unit of a good or service.