Select from the option list provided whether each of the following items related to the going-...

 

Transcribed Image Text:

Select from the option list provided whether each of the following items related to the going- concern issue is most closely related to a certain type of condition or event. Each choice may be used once, more than once, or not at all. Item 1. The company has a large deficit in cash flows from operations. 2. A court has determined that a key manufacturing process infringes on another company's patent. 3. The company defaulted on bank loans and is trying to restructure the debts. 4. The company has reported operating losses for 5 consecutive years. 5. The company's normal attrition of employees significantly exceeds the supply of qualified applicants. 6. Key financial ratios of the company have been increasingly unfavorable for 3 consecutive years. 7. The company lost three major customers due to price competition. The decrease in sales revenue was 45% of expected total sales. 8. The company has not paid common stock dividends for 7 consecutive years. 9. The company disposed of substantial assets for cash. 10. According to recently issued government regulations, the company's operating processes need to be revised significantly. Select an option below 1. Negative trend 2. Financial difficulties 3. Internal matter 4. External matter Select from the option list provided whether each of the following items related to the going- concern issue is most closely related to a certain type of condition or event. Each choice may be used once, more than once, or not at all. Item 1. The company has a large deficit in cash flows from operations. 2. A court has determined that a key manufacturing process infringes on another company's patent. 3. The company defaulted on bank loans and is trying to restructure the debts. 4. The company has reported operating losses for 5 consecutive years. 5. The company's normal attrition of employees significantly exceeds the supply of qualified applicants. 6. Key financial ratios of the company have been increasingly unfavorable for 3 consecutive years. 7. The company lost three major customers due to price competition. The decrease in sales revenue was 45% of expected total sales. 8. The company has not paid common stock dividends for 7 consecutive years. 9. The company disposed of substantial assets for cash. 10. According to recently issued government regulations, the company's operating processes need to be revised significantly. Select an option below 1. Negative trend 2. Financial difficulties 3. Internal matter 4. External matter

Answer rating: 100% (QA)

1 The company has a large deficit in cash flows from operations This item is related to a negative trend A large deficit in cash flows from operations indicates that the company is facing difficulties ... View the full answer