Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entity's ability to continue as a going concern?
A)Significant related party transactions are pervasive.
B)Usual trade credit from suppliers is denied.
C)Arrearages in preferred stock dividends are paid.
D)Restrictions on the disposal of principal assets are present.

Question

Quizplus · Accepted Answer

When suppliers deny usual trade credit, it indicates difficulty in obtaining funds to run the operations of the entity. This lack of funds can lead to operational difficulties and ultimately lead to the entity being unable to continue as a going concern. The other choices may indicate potential risks, but they do not necessarily imply that the entity will be unable to continue operating.

Which of the Following Conditions or Events Most Likely Would