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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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