When There Is Uncertainty About a Company's Ability to Continue

question 6

Multiple Choice

When there is uncertainty about a company's ability to continue as a going concern, the auditor's concern is the possibility that the client may not be able to continue its operations or meet its obligations for a "reasonable period of time." For this purpose, a reasonable period of time is considered not to exceed

• A) six months from the date of the financial statements.
• B) one year from the date of the financial statements.
• C) six months from the date of the audit report.
• D) one year from the date of the audit report.

---

Definitions:

Organizational Development

A field of research, theory, and practice dedicated to expanding the knowledge and effectiveness of people to accomplish more successful organizational change and performance.

Informal Organization

The unofficial and less visible part of the system.

Organization

An entity comprising multiple people, such as an institution or an association, that has a particular purpose.

Formal Organization

The official, legitimate, and most visible part of the system.