Which of the Following Procedures Most Likely Would Assist an Auditor

question 54

Multiple Choice

Which of the following procedures most likely would assist an auditor in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

• A)Performing cutoff tests of sales transactions with customers with long-standing receivable balances.
• B)Evaluating the entity's procedures for identifying and recording related party transactions.
• C)Inspecting title documents to verify whether any real property is pledged as collateral.
• D)Inquiring of the entity's legal counsel about litigation,claims,and assessments.

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Definitions:

Government Revenues

The total money received by the government from various sources, including taxes, fees, and other charges.

Lump-Sum Tax

A tax that is a fixed amount, not dependent on the taxpayer's income level or economic transactions.

Deadweight Loss

A loss of economic efficiency that occurs when the equilibrium for a good or service is not achieved or is achievable but is not achieved.

Vertical Equity

The principle that taxpayers with higher incomes should pay more in taxes than those with lower incomes.