Auditing Standards (SAS No

question 107

Multiple Choice

Auditing standards (SAS No. 59) requires the auditor to evaluate whether there is a substantial doubt about a client's ability to continue as a going concern for at least:

• A) one quarter beyond the balance sheet date.
• B) one quarter beyond the date of the auditor's report.
• C) one year beyond the balance sheet date.
• D) one year beyond the date of the auditor's report.

---

Definitions:

Cash Basis

An accounting method where revenues and expenses are recognized only when cash is received or paid.

Operating Activities

Business activities that relate directly to the production, sale, and delivery of a company's products or services, generating revenue.

Cash Dividends

Payments made by a corporation to its shareholders out of its profits or reserves in the form of cash.

Direct Method

An accounting approach for preparing the cash flow statement where operating cash receipts and payments are listed directly.