When an Auditor of a Nonpublic Company Has Concluded There

question 29

Multiple Choice

When an auditor of a nonpublic company has concluded there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time beyond the date the financial statements will be released (1/26/X2) ,the auditor's responsibility includes:

• A)Preparing prospective financial information to verify whether management's plans can be effectively implemented.
• B)Projecting conditions and events from one year prior to this year's date (12/31/X0)to 12/31/X1.
• C)Issuing an adverse or negative assurance opinion,depending upon materiality,due to the possible effects on the financial statements.
• D)Considering the adequacy of disclosure about the entity's possible inability to continue as a going concern.

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Definitions:

Selling Price

The selling price of goods or services to the consumer.

Variable Manufacturing Overhead

Variable manufacturing overhead comprises costs that fluctuate with production volume, such as utilities and materials used in the production process.

Fixed Manufacturing Overhead

Costs associated with production that do not vary with the level of output, such as salaries of production managers and depreciation of equipment.

Machine-Hours

A measure of production time, representing the total hours worked by machines in the manufacturing process, often used to allocate manufacturing overhead to products.