When an Auditor Concludes There Is Substantial Doubt About an Entity's

question 56

Multiple Choice

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time, the auditor's responsibility is to:

• A)prepare prospective financial information to verify whether management's plans can be effectively implemented.
• B)project future conditions and events for a period of time not to exceed one year following the date of the financial statements.
• C)issue a qualified or adverse opinion, depending upon materiality, because of the possible effects on the financial statements.
• D)consider the adequacy of disclosure about the entity's possible inability to continue as a going concern.

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Definitions:

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, which was developed by B.F. Skinner.

Learned Helplessness

A condition in which a person suffers from a sense of powerlessness, arising from a traumatic event or persistent failure to succeed, theorized to lead to depression and other mental illnesses.

Psychopathology

The scientific study of mental disorders, including their symptoms, etiology (causes), and treatment.

Seligman

A psychologist best known for his research on learned helplessness, optimism, and positive psychology.