When an Auditor Concludes There Is Substantial Doubt About an Entity's

question 40

Multiple Choice

When an auditor concludes there is substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time,the auditor's responsibility is to ________.

• A)prepare prospective financial information to verify whether management's plans can be effectively implemented
• B)project future conditions and events for a period of time not to exceed one year following the date of the financial statements
• C)issue a qualified or adverse opinion,depending upon materiality,due to the possible effects on the financial statements
• D)consider the adequacy of disclosure about the entity's possible inability to continue as a going concern and draw attention to the issue in the audit report.

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Definitions:

UCC

Uniform Commercial Code, a standardized set of business and commercial laws that facilitate the fair conduct of transactions and dealings across state lines.

Statute of Limitations

A law that sets the maximum time the parties involved have to initiate legal proceedings from the date of an alleged offense.

Personal Injury

Personal injury involves harm caused to an individual's body, mind, or emotional well-being, due to someone else's negligence or intentional acts.

Breach of Warranty

A violation of the terms of a warranty or guarantee, often related to the quality, condition, or performance of goods or services.