1. Which statement(s) are accurate regarding the "going-concern" basis of accounting? 1. The financial statements are prepared on the assumption that the entity is a going concern and will continue its operations for a reasonable period of time. 2. The financial statements are prepared on the assumption that the entity will be unable to continue as a going concern and will discontinue its operations within a reasonable period of time. 3. The "going-concern" basis is standard under GAAP 4. The "going-concern" basis is not standard under GAAP. A. 1 and 2, but not 3 or 4 B. 1 and 2, but also 3 C. 1 and 3, but also 4 D. 1 and 3, but not 2 or 4 2. What accounting framework is used if liquidation is "imminent?" A. Bankruptcy basis B. Insolvency basis C. Liquidation basis D. Tax basis 3. SAS No. 132 changes the assessment period from a "reasonable period of time to 12 months beyond the date of the financial statements for which of the following types of statements: A. for GAAP statements B. for GASB statements C. for tax-basis statements D. for cash basis statements 4. Company X has financial trouble. Its management is evaluating X for going concern under GAAP. Which of the following is correct? A. X should use the liquidation basis of accounting because it is in financial trouble B. X should use the going-concern basis of accounting unless the liquidation basis is appropriate C. X should convert to tax basis D. X should value its balance sheet at fair value 5. When management's plans include financial support by third parties and/or the entity's owner-manager, and such support is necessary in supporting management's assertions about the entity's ability to continue as a going concern for a reasonable period of time, the auditor should obtain sufficient appropriate audit evidence about: A. The intent of the supporting parties to provide the necessary financial support, including written evidence of such intent B. The ability of the supporting parties to provide the necessary financial support C. A supporting party's intent and ability to provide support to the entity that is sufficient to mitigate substantial doubt of going concern D. All of the above. 6. What evidence of the supporting party's "intent" to provide such financial support must the auditor obtain? A. A support letter from management that provides written evidence of a commitment from the supporting party to provide or maintain the necessary financial support B. A written confirmation directly from the supporting party, evidencing the existence of commitments to provide or maintain the necessary financial support. A written confirmation may be necessary if management has only oral evidence of such financial support. C. A and B D. A or B (or both)