The adverse effects of events causing an auditor to believe there is substantial doubt about an entity's ability to continue as a going concern would most likely be mitigated by evidence relating to the:
A)ability to expand operations into new product lines in the future.
B)feasibility of plans to purchase leased equipment at less than market value.
C)marketability of assets that management plans to sell.
D)committed arrangements to convert preferred stock to long-term debt.

Question

Quizplus · Accepted Answer

The marketability of assets that management plans to sell can provide evidence that the entity has the ability to generate cash flow to support its ongoing operations and address any financial difficulties it may be facing. This evidence can help mitigate the adverse effects of events causing an auditor to have doubt about the entity's ability to continue as a going concern. Options A, B, and D are not necessarily relevant to the entity's ability to continue as a going concern.

The Adverse Effects of Events Causing an Auditor to Believe