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    Question

    Auditor notes that the company has accumulated losses

    exceeding net worth, but management claims recovery. What should auditor consider?
    A Going concern assumption Correct Answer Incorrect Answer
    B Consistency Correct Answer Incorrect Answer
    C Accrual concept Correct Answer Incorrect Answer
    D Matching principle Correct Answer Incorrect Answer

    Solution

    Such circumstances cast doubt on going concern, requiring disclosure or modification in audit report.

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