Question

With respect to the going concern assumption, auditors also draw their own conclusions _______.

A. About whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time.
B. About whether there is substantial doubt about the entity's ability to continue as a going concern for an indefinite period of time.
C. As to whether the client is likely to be a target for an acquisition by another company in the near future.
D. As to whether the client is likely to attempt to acquire another company in the near future.

Answer 1

Regarding the going concern assumption, auditors conclude if there is doubt about an entity's ability to continue operations for a reasonable period, usually one year.

Step-by-step explanation:

With respect to the going concern assumption, auditors draw their own conclusions A. About whether there is substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time. This involves assessing the financial health and future prospects of an entity to determine if the entity can continue its operations without the threat of liquidation for the foreseeable future, typically viewed as at least one year from the financial statement date.

Auditors focus on this time frame to provide stakeholders with assurance that the financial statements are prepared under the premise that the business will continue its operations unless significant evidence suggests otherwise.