When a Question Arises About an Entity's Continued Existence, the Auditor

question 17

Multiple Choice

When a question arises about an entity's continued existence, the auditor should consider factors tending to mitigate the significance of negative information concerning the entity's means for maintaining adequate cash flow. An example of such a factor is the:

• A)possibility of purchasing certain assets rather than leasing them.
• B)capability of extending the due dates of existing debt.
• C)appropriateness of changing depreciation methods from double declining balance to straight line.
• D)marketability of property and equipment that management plans to keep.

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Definitions:

Foreign Bonds

These are bonds issued in a domestic market by a foreign entity, in the domestic market's currency, as a way for the issuer to raise capital from investors in that market.

Foreign Government

The governing authority of a nation, state, locality, or community outside of one's own country.

Direct Quote

The rate of foreign exchange denoted in the national currency per each foreign currency unit.

British Pounds

The official currency of the United Kingdom, also known as GBP (Great British Pounds).