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

question 39

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.

Understand the impact of service charges on currency exchanges.

Apply mathematical ratios and proportions in financial contexts.

Calculate the impact of inflation and the cost of living adjustments over time.

Understand the principles of investing and the calculation of gains or losses in a foreign currency.

---

Definitions:

American Put Option

A financial derivative that gives the holder the right, but not the obligation, to sell a specific amount of an underlying asset at a specified price within a given time frame.

Black-Scholes

A mathematical model used to calculate the theoretical price of European style options based on risk, time, and other factors.

Variance

A statistical measure of the dispersion or spread between numbers in a data set.

Call Option

A financial contract giving the option buyer the right, but not the obligation, to buy a specified quantity of an asset at a set price within a specified time.