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My textbook isn't too clear on the subject, and makes it seem very arbitrary. Any help will be appreciated. I apologize for the image small.
My textbook isn't too clear on the subject, and makes it seem very arbitrary. Any help will be appreciated.
I apologize for the image small. You can select "open in a new tab", or I can revise it if you have trouble reading it.
Jane is a partner who is auditing Doors Enterprise. Jane is considering Doors Enterprises' ability to continue as a going concern Which of the following are conditions or events that may indicate substantial doubt about Doors Enterprises' ability to continue as a going concern? Recurring operating profits Denial of usual trade credit Defaults on loans Substantial dependence on the success of a particular project Positive cash flows from operating activities Which of the following management plans may alleviate the substantial doubt that the entity is a going concern? Existing arrangements to restructure debt Plans to dispose of assets Plans to increase dividend distributions Plans to buy a new franchise Plans to crease ownership equity through the sale of stock Based on the audit procedures, Jane determines there is substantial doubt about Door Enterprises' ability to continue as a going concern Door Enterprises prepares proper disclosures related the substantial doubt. Which the following is/are of the most likely possible effects of the going concern issue on the audit report? Issue an unmodified with an emphasis-of-matter paragraph Issue a qualified or adverse Issue a disclaimer or adverse Issue a qualified or disclaimer Issue a disclaimer If Jane elects to include an emphasis-of-matter paragraph, which of the following is appropriate wording for that paragraph? The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note X to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency, which together raise substantial doubt about its ability to continue as a going concern If the Company continues to suffer recurring losses from operations and continues to have a net capital deficiency, there may be substantial doubt about its ability to continue as a going concern Management's plans in regard to these matters are also described in Note X. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter. The Company has been unable to renegotiate its expiring credit agreements. Unless the Company is able to obtain financial support, there is substantial doubt about its ability to continue as a going concernStep by Step Solution
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