When an Auditor of Financial Statements Has Substantial Doubt About

question 22

Multiple Choice

When an auditor of financial statements has substantial doubt about an entity's ability to continue as a going concern, the auditor most likely would express a qualified opinion if:

• A) The effects of the adverse financial conditions are likely to be negative.
• B) Information about the entity's ability to continue as a going concern is not disclosed in the financial statements.
• C) Management has no plans to reduce or delay future expenditures.
• D) Negative trends and recurring operating losses appear to be irreversible.

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Definitions:

Fast-Food Consumption

The frequency at which individuals consume meals provided by fast-food restaurants.

Measurement

The process or the result of quantifying objects, phenomena, or relationships according to established rules and units.

Weight Gain

The increase in body weight over a period, which may result from growth, excess calorie intake, or other factors.

Perfect Reliability

Perfect reliability refers to a hypothetical situation where a measurement is completely free from error, achieving a reliability coefficient of 1.