After Considering an Entity's Negative Trends and Financial Difficulties,an Auditor

question 34

Multiple Choice

After considering an entity's negative trends and financial difficulties,an auditor has substantial doubt about the entity's ability to continue as a going concern.The auditor's considerations relating to management's plans for dealing with the adverse effects of these conditions most likely would include management's plans to:

• A)Increase current dividend distributions.
• B)Reduce existing lines of credit.
• C)Increase ownership equity.
• D)Purchase assets formerly leased.

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Definitions:

Dependent Variable

The variable in an experiment that is expected to change as a result of manipulations to the independent variable.

Highly Correlated

Refers to two or more variables that have a strong linear relationship with each other, indicated by a correlation coefficient close to either 1 or -1.

Linear Regression Model

An approach in statistics that aims to represent the connection between a dependent variable and one or more independent variables through the application of a linear equation to the data observed.

Random Error Term

A variable in statistical models that represents unexplained or random fluctuations in the observed data, not accounted for by the explanatory variables.