When an Auditor of Financial Statements Has Substantial Doubt About

question 28

Multiple Choice

When an auditor of financial statements has substantial doubt about an entity's ability to continue as a going concern,the auditor most likely would express a qualified or adverse opinion if:

• A)The effects of the adverse financial conditions are likely to be negative.
• B)Information about the entity's ability to continue as a going concern is not disclosed in the financial statements.
• C)Management has no plans to reduce or delay future expenditures.
• D)Negative trends and recurring operating losses appear to be irreversible.

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Definitions:

Telepathy

The purported transmission of information from one person to another without using any known human sensory channels or physical interaction.

Kinesthesia

The sense of movement, referring to the perception of the body's own movements and position.

Mapping

The process of creating visual representations of physical areas on Earth, detailing geographic features, boundaries, and elements for navigation, planning, or analysis.

Development

The process of economic growth, expansion, or realization of regional resource potential, often associated with improvements in the quality of life and living standards.