ISA 570 Going concern MCQs

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Going concern is the assumption that the entity will continue in business for the foreseeable future. Here on MCQs.club we have prepared easy Multiple
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ISA 570, Going concern

Going concern is the assumption that the entity will continue in business for the foreseeable future. Here on MCQs.club we have prepared easy Multiple-Choice Questions (MCQs) on ISA 570, Going concern revised IFAC that fully cover the ISA 570 summary and definition, ISA 570 MCQs with answers, these MCQs are a basis of conclusions. These MCQ on SA 570 are helpful for Competitive exams, Professional Accountancy exams and Business management exams.

  1. Going concern – is the assumption that the entity will continue in business for the foreseeable future.
    1. True
    2. False
  1. Consideration of the foreseeable future involves making a judgment about future events, which are inherently uncertain.
    1. True
    2. False
  1. Financial statements are prepared on the basis that the reporting entity is a going concern. An entity shall prepare financial statements on a going concern basis, unless management:
    1. either intends to liquidate the entity or to cease trading
    2. has no realistic alternative but to do so.
    3. Both A or B
    4. None
  1. Where the assumption is made that the company will cease trading, the financial statements are prepared using:
    1. the break-up basis
    2. liquidation basis
    3. Both A&B
    4. None
  1. Under the break-up or liquidation basis:
    1. The basis of preparation and the reason why the entity is not regarded as a going concern are disclosed.
    2. Assets are recorded at likely sale values.
    3. Inventory and receivables may need to be written down as inventory may be sold for a lower price or may be scrapped, and receivables may not pay if they know the company is ceasing to trade.
    4. All of the above
  1. Which of the following is correct regarding Director’s responsibilities in respect of going concern?
    1. To assess the company’s ability to continue as a going concern when they are preparing the financial statements.
    2. Directors should prepare forecasts to help assess whether they are likely to be able to continue trading for the next 12 months as a minimum.
    3. Both A&B
    4. None
  1. When the directors are performing their assessment, they should take into account a number of relevant factors such as:
    1. Current and expected profitability
    2. Debt repayment
    3. Sources (and potential sources) of financing.
    4. All of the above
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