In Which of the Following Circumstances Would Auditors Be Most

question 86

Multiple Choice

In which of the following circumstances would auditors be most likely to express an adverse opinion?

• A) The chief executive officer refuses to provide the auditors access to minutes of the board of directors' meetings.
• B) Tests of controls show that the entity's internal control is so ineffective that it cannot be relied upon.
• C) The financial statements are not in conformity with generally accepted accounting principles regarding the capitalization of leases.
• D) Information comes to the auditors' attention that raises substantial doubt about the entity's ability to continue as a going concern.

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Definitions:

Market Demand

The total quantity of a particular good or service that all consumers in a market are willing and able to purchase at various prices.

Competitive Industry

An industry environment where numerous competitors offer similar products or services, resulting in the need for businesses to vie for market share and customer attention.

Homogenous Product

Goods that are identical in quality and cannot be distinguished from one another by consumers.

Barriers To Entry

Obstacles that prevent new competitors from easily entering an industry or area of business, such as high start-up costs or complex regulations.