AUD Deck 5

Question 1

if mgmt’s plans alleviate the substantial doubt, an emphasis of matter paragraph must be added (T/F)

Answer 1

FALSE; it MAY bed added. it’s optional

Question 2

Inquiring of the entity’s legal counsel about litigation, claims, and assessments may indicate substantial doubt about an entity’s ability to continue as a going concern (T/F)

Answer 2

TRUE

Question 3

mgmt should record legal liability amounts if they are considered ______ and reasonably estimable

Answer 3

PROBABLE

Question 4

Management would _____ the contingencies in the notes to the financial statements if the contingencies were probable but not reasonably estimable or reasonably possible instead of probable.

Answer 4

DISCLOSE