The Auditor of Kennedy Ltd Has Serious Doubts That the Entity

question 42

Multiple Choice

The auditor of Kennedy Ltd has serious doubts that the entity will continue as a going concern.There is adequate disclosure of this significant uncertainty in the notes to the financial report.The uncertainty is the result of a single factor affecting the client.What type of audit opinion should the auditor express?

• A)Unmodified opinion with an Other Matter paragraph.
• B)Qualified opinion.
• C)Adverse opinion.
• D)Unmodified opinion with a Material Uncertainty Related to Going Concern paragraph.

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses and taxes from total revenues, indicating the company's profitability.

Salary Allowances

Pre-determined amounts allocated for specific salary-related expenses, often including tax-exempt benefits.

Original Capital

The initial amount of money invested in a business by its owners or the initial value of an investment.

Salaries

A fixed amount of money paid to employees for their services during a set time frame, often monthly or bi-weekly.