Which of the Following Auditing Procedures Most Likely Would Assist

question 14

Multiple Choice

Which of the following auditing procedures most likely would assist auditors in identifying conditions and events that may indicate substantial doubt about an entity's ability to continue as a going concern?

• A)Inspecting title documents to verify whether any assets are pledged as collateral.
• B)Confirming with third parties the details of arrangements to maintain financial support.
• C)Reconciling the client's cash balance with the cut-off bank statement and the bank confirmation.
• D)Comparing the entity's depreciation and asset capitalization policies to other entities in the industry.

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Definitions:

Significant Influence

The capacity of an investor to affect the financial or operating policies of an investee without having full control or majority ownership.

Individual AFS Securities

Available-for-Sale (AFS) securities are financial assets held by an organization that can be sold in the market, where "individual" refers to each specific security within the AFS category.

Net Proceeds

The amount of money received from a transaction after deducting all associated costs and expenses.

Cost Method

An accounting approach used for investments, where the investment is recorded at cost and adjustments are made for dividends received or permanent declines in value.