A company’s management believes that substantial doubt exists that the company can meet its financial obligations as they come due for a one-year period from the issuance of its financial statements. Management is studying the plans that have been developed to avoid this problem. What two decisions must management make?

A company’s management believes that substantial doubt exists that the company can meet its financial obligations as they come due for a one-year period from the issuance of its financial statements. Management is studying the plans that have been developed to avoid this problem. What two decisions must management make?

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter3: Internal Control Over Financial Reporting: Responsibilities Of Management And The External Auditor

Section: Chapter Questions

Problem 33RQSC

See similar textbooks

Similar questions

A company believes that there might be substantial doubt that it can meet its financial obligations as they come due for one year from the issuance of its financial statements. What plans might mitigate this concern?
Which is correct ?
True or false: A company is having economic problems and substantial doubt exists as to whether the company can continue as a going concern. At a minimum, management must ensure that plans are in place to address the problems and it is probable that these plans can be implemented within the next year. True O False
Which of the following statements is (are) true, concerning the Going Concern assumption? When preparing financial statements, management is required to make an assessment of an enterprise’s ability to continue as a going concern which should be at least twelve months from balance sheet date When an enterprise has a history of profitable operations and ready access to financial resources it is not a detailed analysis as to is ability to operate as a going concern is not necessary When the financial statements are not prepared on a going-concern basis, this fact should be disclosed I and II only II and III II and III only I, II, and III
While assisting the accounting department with completing the current year's financial statements, you have been asked to review a list of contingent liabilities. How would a manager, review the list of contingent liabilities and determine their probability?
Economic consequences of accounting standard-setting means: a. standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard. b. standard-setters must ensure that no new costs are incurred when a new standard is issued. c. the objective of financial reporting should be politically motivated to ensure acceptance by the general public. d. accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.
What are possible plans that management of a troubled business might create to mitigate substantial doubt that the entity will fail to make its debt payments within one year from the issuance of financial statements? Essay Toolbar navigation BI U S E := A > !!!
Economic consequences of accounting standard-setting means:a. standard-setters must give fi rst priority to ensuring that companies do not suffer any adverseeffect as a result of a new standard.b. standard-setters must ensure that no new costs are incurred when a new standard is issued.c. the objective of financial reporting should be politically motivated to ensure acceptance by thegeneral public.d. accounting standards can have detrimental impacts on the wealth levels of the providers of financialinformation.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Which is correct about financial information? a. Financial information’s purpose is only to comply with needs external users such as the government, investors and external stakeholders. b. Financial information can be used for forecasting and budgeting. c. Financial information deviates from the actual thus it justifies erroneous management decisions. d. Financial information is used by line managers to evaluate performance of staff positions. e. b & d f. All of the above g. None of the above
Subsequent Events and Contingent Liabilities. Crankwell Inc. is preparing its annualfinancial statements and annual report to stockholders. Management wants to be sure thatall of the necessary and proper disclosures have been incorporated into the financial statements and the annual report. Two classes of items that have an important bearing on thefinancial statements are subsequent events and contingent liabilities. The financial statements could be materially inaccurate or misleading if proper disclosure of these items isnot made.Required:a. With respect to subsequent events1. Define what is meant by a subsequent event.2. Identify two types of subsequent events and explain the appropriate financial statement presentation of each type.3. What are the procedures that should be performed to ascertain the existence of subsequent events?b. With respect to contingent liabilities1. Identify the essential elements of a contingent liability.2. Explain how a contingent liability should be…
Which of the following is a valid assumption from an accounting perspective? O A company that has declared bankruptcy is referred to as a going concern. O Financial statements should be prepared on a calendar-year basis. O Financial statements are prepared for a specific entity that is distinct from the entity's owners. O The results of customer satisfaction surveys should be reported in the financial statements because such results could impact decisions of financial statement users.