The Auditor Is Responsible for Evaluating the Likelihood of a Client

question 52

Multiple Choice

The auditor is responsible for evaluating the likelihood of a client not going bankrupt for the next 12 months.What basis will the auditor use to assess this issue?

• A)Management integrity.
• B)Control environment.
• C)Absolute assurance.
• D)Substantial doubt.

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Definitions:

Exclusive Dealership

A business arrangement wherein a retailer or distributor is the only authorized seller of a specific brand or product in a designated area.

Moonlighting

The practice of holding an additional job or jobs, often at night, in addition to one's main job, usually to earn extra income.

Cash Flow Problems

Financial challenges faced by businesses when expenses outpace earnings, impacting the ability to maintain operations.

Economic Recession

A period of temporary economic decline during which trade and industrial activity are reduced, typically identified by a fall in GDP in successive quarters.