AUD

AUD practice questions, page 26 of 41, with answer review and explanations.

Question 126

Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?

  1. Cash flows from operating activities are negative.
  2. Research and development projects are postponed.
  3. Significant related party transactions are pervasive.
  4. Stock dividends replace annual cash dividends.

Question 127

For an entity that does not receive governmental financial assistance, an auditor's standard report on financial statements generally would not refer to:

  1. Significant estimates made by management.
  2. An assessment of the entity's accounting principles.
  3. Management's responsibility for the financial statements.
  4. The entity's internal control.

Question 128

Which of the following procedures should an auditor generally perform regarding subsequent events?

  1. Compare the latest available interim financial statements with the financial statements being audited.
  2. Send second requests to the client's customers who failed to respond to initial accounts receivable confirmation requests.
  3. Communicate material weaknesses in the internal control structure to those charged with governance.
  4. Review the cut-off bank statements for several months after the year-end.

Question 129

An auditor's report contains the following sentences: We did not audit the financial statements of JK Co., a wholly owned subsidiary, which statements reflect total assets and revenues constituting 17 percent and 19 percent, respectively, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for JK Co., is based solely on the report of the other auditors. These sentences:

  1. Are an improper form of reporting.
  2. Divide responsibility.
  3. Disclaim an opinion.
  4. Qualify the opinion.

Question 130

Which of the following phrases should be included in the opinion paragraph when an auditor expresses a qualified opinion?

  1. Option A
  2. Option B
  3. Option C
  4. Option D