Which of the following audit procedures would the auditor use to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time?
A)net liability positions
B)positive operating cash flows
C)inability to pay creditors on due dates
D)change from cash-on-delivery to credit transactions with suppliers
E)loss of key management with replacement
F)both A and C
G)both B and E
H)both D and E

Question

Quizplus · Accepted Answer

The auditor would use both A (net liability positions) and C (inability to pay creditors on due dates) to identify conditions that may indicate doubt that the company will continue as a going concern for a reasonable period of time. Net liability positions would indicate that the company owes more than it owns, which could indicate financial instability. Inability to pay creditors on due dates indicates liquidity issues and difficulty in meeting financial obligations, which also suggests financial instability. Positive operating cash flows (B) would actually indicate that the company is currently able to generate enough cash to meet its obligations, which would not suggest doubt in the company's ability to continue as a going concern. Choices D and E both relate to changes in management or business practices, which, while potentially significant, may not necessarily indicate doubt in the company's ability to continue as a going concern.

Which of the Following Audit Procedures Would the Auditor Use