Which of the Following Audit Procedures Would the Auditor Use

question 50

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 asset positions
• B)positive operating cash flows
• C)ability to pay creditors on due dates
• D)change from credit to cash-on-delivery transactions with suppliers
• E)loss of key management without replacement
• F)both A and B
• G)both C and E
• H)Both D and E

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Definitions:

Cost Method

An accounting method used for investments, where the investment is recorded at cost and adjustments are made only for dividends received and permanent declines in value.

Retained Earnings

The portion of a company's profits that is kept or retained and not paid out as dividends to shareholders, often used for reinvestment in the business or to pay down debt.

Equity Method

An accounting approach for recording investments in other entities, where the investment's value is adjusted based on the investor's share of the investee's profits or losses.

Dividends

Payments made by a corporation to its shareholder members, distributed from the company's profits.