Gleim 14.4

Which of the following conditions or events is most likely to cause an auditor to have substantial doubt about an entity's ability to continue as a going concern? A. Cash flows from operating activities are negative. B. Research and development projects are postponed C. Significant related party transactions are pervasive D. Stock dividends replace annual cash dividends

A. Cash flows from operating activities are negative.

An auditor believes that there is a substantial doubt about an entity's ability to continue as a going concern for a reasonable period of time. In evaluating the entity's plans for dealing with the adverse effects of future conditions and events, the auditor most likely would consider, as a mitigating factor, the entity's plans to A. Extend the due dates of existing loans B. Operate at increased levels of production C. Accelerate expenditures for research and development projects D. Issue stock options to key executives

A. Extend the due dates of existing loans

The International Standards of Auditing require consideration of going concern issues A. For the last 6 months for the date of the financial statements B. Extending to at least, but not limited to, 1 year from the date of the financial statements. C. Overlapping the next year's financial statement period by at least 3 months D. By a period no more than reasonably expected by the user

B. Extending to at least, but not limited to, 1 year from the date of the financial statements.