If New Events or Conditions Indicate That the Entity Will

question 46

Multiple Choice

If new events or conditions indicate that the entity will not be able to continue as a going concern,the entity must:

• A) treat this as an adjusting event and adjust the affected accounts in the financial report.
• B) treat this as a non-adjusting event and discloses the reason for the breach of the going concern assumption.
• C) prepare its financial report on a going concern basis and ask the auditor to indicate in the opinion the breach of the going concern basis.
• D) disclose the assets and liabilities in the statement of financial position on a liquidation basis.

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Definitions:

Overturning Precedent

The act of a court setting aside a previous judicial decision, often leading to a change in case law.

Common Law

A body of unwritten laws based on legal precedents established by the courts, as opposed to statutory laws enacted by legislative bodies.

U.S. Constitution

The supreme law of the United States, establishing the framework of national government and the rights and freedoms of individuals.

Sexual Harassment

Unsolicited sexual propositions, solicitations for sexual benefits, and any form of sexual natured verbal or physical harassment.