The Auditor's Responsibility Regarding the Going Concern Assumption Is to

question 69

Multiple Choice

The auditor's responsibility regarding the going concern assumption is to

• A)evaluate the possibility that the company could go bankrupt
• B)evaluate the appropriateness of management's use of the going concern assumption in the preparation and presentation of the financial statements
• C)conclude about whether there is a material uncertainty about the company's ability to continue as a going concern
• D)determine the implications for the audit report
• E)estimate the net income that the company expects to earn during the current year
• F)both A and B
• G)both C and D
• H)both D and E

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Definitions:

Receivable Turnover Ratio

A financial metric that measures how efficiently a company collects cash from its customers by comparing net credit sales to average accounts receivable.

Return On Assets

A profitability ratio that measures how efficient a company is at using its assets to generate earnings, calculated as net income divided by total assets.

Times Interest Earned Ratio

A financial metric that measures a company's ability to cover its interest expenses with its earnings before interest and taxes (EBIT).

Income Tax Payments

Payments made to government entities based on earned income and profits, an obligation for individuals and businesses.