Which of the Following Best Describes the Purpose of an Audit

question 120

Multiple Choice

Which of the following best describes the purpose of an audit?

• A)To prove the accuracy of an entity's financial statements.
• B)To lend credibility to an entity's financial statements.
• C)To audit every transaction that an entity entered into.
• D)To establish that a corporation's stock is a sound investment.

---

Definitions:

Total Assets

The sum of all assets owned by a company, including cash, inventory, property, and equipment.

Operating Cash

Cash generated from a company's normal business operations.

Investing Activities

Financial transactions involving the acquisition or disposal of long-term assets or other investments not included in cash equivalents.

Financing Activities

Transactions involving raising funds for the company through borrowing or issuing equity.