Which of the Following Conditions or Events Most Likely Would

question 64

Multiple Choice

Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?

• A)Significant related party transactions are pervasive.
• B)Usual trade credit from suppliers is denied.
• C)Arrearages in preferred stock dividends are paid.
• D)Restrictions on the disposal of principal assets are present.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some of the numbers more than others.

Stock Options

Financial instruments granting the holder the right, but not the obligation, to buy or sell a stock at a specified price within a certain period.

GAAP

Generally Accepted Accounting Principles, which are standards and conventions for financial reporting in the United States.

Compensation Costs

The expenses incurred by a company to pay employees, including salaries, benefits, bonuses, and social security contributions.