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:

Stock Market

A collection of markets and exchanges where stocks, bonds, and other securities are bought, sold, and traded.

Sell Stocks

The process of offloading ownership shares in a company to other investors in exchange for money.

Due Diligence

A rigorous process that involves evaluating an investment opportunity prior to the contract being signed.

Investment Opportunity

A situation, asset, or project that promises future financial returns, involving potential for profit as well as risk of loss.