Which of the Following Audit Procedures Would the Auditor Use

question 89

Multiple Choice

Which of the following audit procedures would the auditor use to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time?

• A)net liability positions
• B)positive operating cash flows
• C)inability to pay creditors on due dates
• D)change from cash-on-delivery to credit transactions with suppliers
• E)loss of key management with replacement
• F)both A and C
• G)both B and E
• H)both D and E

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Definitions:

Product Differentiation

The marketing process of distinguishing a product or service from others in the market to make it more attractive to a particular target market.

Demand Curve

A graph representing the relationship between the price of a good and the quantity demanded by consumers.

Barriers To Entry

Are obstacles that make it difficult for new competitors to enter a market, including high startup costs, strict regulations, and established brand loyalty among consumers.

Excess Capacity

Plant resources that are underused when imperfectly competitive firms produce less output than that associated with achieving minimum average total cost.