If the Auditor Concludes That There May Be a Going-Concern

question 77

Multiple Choice

If the auditor concludes that there may be a going-concern problem,which of the following is not typically evaluated to determine the reasonableness of management's plans to overcome this problem?

• A)Management's assumption about increasing prices or market share in relationship to current industry developments.
• B)Management's assumptions about cost savings related to a reduction in the work force should be recomputed and evaluated to determine any hidden costs.
• C)Management's past track record related to delaying unnecessary expenditures.
• D)Management's assumptions about selling off assets and their relationship to current market prices.

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Definitions:

Treatment Variable

A variable manipulated by an experimenter in a study to observe its effect on the dependent variable.

Reliability

The degree to which an assessment tool produces stable and consistent results over time.

Validity

The extent to which a test or instrument measures what it is intended to measure, indicating the accuracy of the test.

Research Process

A systematic procedure that involves the collection, analysis, and interpretation of data to answer a question or solve a problem.