An Auditor Concludes That There Is Substantial Doubt About an Entity's

question 43

Multiple Choice

An auditor concludes that there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. If the entity's financial statements adequately disclose its financial difficulties, the auditor's report is required to include an explanatory/emphasis-of-matter paragraph that specifically uses the phrase(s) :

• A)"reasonable period of time, not to exceed one year" and "going concern."
• B)"reasonable period of time, not to exceed one year" but not "going concern."
• C)"going concern" but not "reasonable period of time, not to exceed one year."
• D)neither "going concern" nor "reasonable period of time, not to exceed one year."

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Definitions:

Buyer in the Ordinary Course of Business

A legal term describing a person who purchases goods in good faith within the usual and customary practices of a particular trade or business.

Bona Fide Purchaser

A Bona Fide Purchaser is someone who buys property in good faith, without notice of any other party's claim to the property or any defects in the title.

Right to Redeem

The legal right allowing a debtor to reclaim ownership of property by paying off a loan or other obligation, usually within a specific period of time after a foreclosure sale.

Secured Party

An individual or organization that holds an interest in a security agreement on property offered as collateral, ensuring payment or performance of some obligation.