The responsibility to make an assessment of an

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The responsibility to make an assessment of an entity’s ability to continue as a going concern rests with the A. Auditor B. Entity’s management C. SEC D. Entity’s creditors 99. Which statement best describes the auditor’s responsibility concerning the appropriateness of the going concern assumption in the preparation of the financial statements? A. The auditor’s responsibility is to make a specific assessment of the entity’s ability to continue as a going concern. B. The auditor’s responsibility is to predict future events or conditions that may cause the entity to cease to continue as a going concern. C. The auditor’s responsibility is to consider the appropriateness of management’s use of the going concern assumption and consider whether there are material uncertainties about the entity’s ability to continue as a going concern that need to be disclosed in the financial statements. D. The auditor’s responsibility is to give a guarantee in the audit report that the entity has the ability to continue as a going concern. Page 18 100. Which of the following audit procedures would most likely assist an auditor in identifying conditions and events that may indicate there could be substantial doubt about an entity’s ability to continue as a going concern? A. Confirmation of bank balances. B. Confirmation of accounts receivable from major customers. C. Reconciliation of interest expense with debt outstanding. D. Review of compliance with terms of debt agreements. 101. Harold, CPA, believes there is substantial doubt about the ability of Jersamtan Co. to continue as a going concern for a reasonable period of time. In evaluating Jersamtan’s plans for dealing with the adverse effects of future conditions and events, Harold most likely would consider, as a mitigating factor, Jersamtan’s plans to A. Postpone expenditures for research and development projects. B. Purchase production facilities currently being leased from a related party. C. Strengthen internal controls over cash disbursements. D. Discuss with lenders the terms of all debt and loan agreements.
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102. A written representation from a client’s management that, among other matters, acknowledges responsibility for the fair presentation of financial statements, should normally be signed by the A. Chief financial officer and the chair of the board of directors. B. Chief executive officer and the chief financial officer. C. Chief executive officer, the chair of the board of directors, and the client’s lawyer. D. Chair of the audit committee of the board of directors. 103. The date of the management representation letter should coincide with the date of the A. Statement of Financial Position B. Latest related party transaction C. Auditor’s report D. Latest interim financial information 104. Which of the following statements concerning management representations is incorrect?
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