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Q: Going Concern
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- Which of the following is a valid assumption from an accounting perspective? O A company that has declared bankruptcy is referred to as a going concern. O Financial statements should be prepared on a calendar-year basis. O Financial statements are prepared for a specific entity that is distinct from the entity's owners. O The results of customer satisfaction surveys should be reported in the financial statements because such results could impact decisions of financial statement users.15 Why does a business maintain a provision for doubtful debts account? to apply the accounting principle of prudence to avoid profit for the year being understated to have an accurate forecast of debts which will be uncollectible to reduce the expense of irecoverable debts in the future 16How should ioventory he valued2Match the following terms or phrases in (a–g) with the explanations in 1–8. Terms or phrases may be used more than once. Question 11 options: Current assets/Current liabilities Probable likelihood and estimable liability Measures the “instant” debt-paying ability of a company Current assets – Current liabilities (Cash + Temporary investments + Accounts receivable)/Current liabilities Cash + Temporary investments + Accounts receivable Probable likelihood of a liability but cannot be estimated Remote contingent liability Reasonably possible likelihood of a liability 1. Current ratio 2. Working capital 3. Quick assets 4. Quick ratio 5. Record an accrual and disclose in the notes to the financial statements 6. Disclose only in notes to financial statements 7. No disclosure needed in notes to financial statements
- Which of the following concepts states that a business will continue its operations for the foreseeable future and the company will not be forced to liquidate in the near future? a. Accrual basis b. Materiality c. Consistency concept d. Going concernFinancial accounting information ________.A. should be incomplete in order to confuse competitorsB. should be prepared differently by each companyC. provides investors guarantees about the futureD. summarizes what has already occurred12-Which of the following concept states that a business will continue its operations for the foreseeable future and the company will not be forced to liquidate in near future. a. Accrual basis b. Materiality c. Going concern d. Consistency concept
- use legal basis in answering 1. If your company would suffer financial liquidity problems but is not yet insolvent, although the management foresees its inability to pay its obligations as they fall due, what do you propose to be done, and how it would be done? In outline form, please provide the steps/procedures to be undertaken. 2. In case your company is insolvent, can the - (1) individual stockholders, (2) creditors, or (3) any officer of the company- file an insolvency petition? 3. Assuming that there are pending suits against your company, what would be the effect of filing an insolvency proceeding on such pending suits?bad debt expense is relevant into the followings cycles: a. capital acquisition and payments b. Inventory and warehousing c. payroll and personnel d. sales and collection أخلِ اختياري سؤال 2 غير مجاب عليه بعد الدرجة من 1.00 علِّم هذا السؤال نص السؤال CPA Ellen Stout performs the audit of the local symphony society. Because of her good work, she was elected an honorary member of the board of directors. This action does not violate the independency of the auditor إختر واحداً: صح خطأ سؤال 3 غير مجاب عليه بعد الدرجة من 1.00 علِّم هذا السؤال نص السؤال The two characteristics of the appropriateness of evidence are a. relevance and reliability. b. relevance and timeliness. c. relevance and accuracy. d. reliability and accuracy.Question 2 In each case state which concept or concepts are relevant to the situation given. a. Subtracting an amount paid for insurance because it belongs to the next year. b. Maintain the same percentage rate of the provision for doubtful debts despite it not being always accurate in predicting future bade debts c. Valuing inventory at likely selling price for a successful business d. Valuing a non-current asset at its likely market value.
- Choose the correct. A company’s management has uncovered events that indicate that substantial doubt exists that the company can pay its debts as they come due over the following year. What should management do next?a. Management should disclose that substantial doubt exists that the company can remain in existence.b. Management should examine the plans created to address the concern.c. Management should adjust all asset balances to fair value.d. Management should adjust all liabilities to expected settlement amounts.Which of the following would result in the RETURN OF ASSETS for an accounting entity deteriorating. Answer Can be all of them, none of them or any combination of them. 1. Accrued interest revenue is adjusted 2. Share market price of the entity's shares increases 3. Cash receipt from a customer for amounts owing which was previously sold on creditWhich of the following terms defines the underlying assumption of Going Concerns? A The company is expected to continue to operate indefinitely as a financially viable enterprise. The company expected to continue until it is evidence that bankruptcy or liquidation is likely When accountants prepare financial statements they do so with the underlying assumption that the company is a going concern. D All of statements are correct for going concern assumption