Which of the Following Statements Is True About an Audit

question 72

Multiple Choice

Which of the following statements is true about an audit?

• A) Only an independent CPA must perform an audit.
• B) An auditor may use the accounting standards defined by his or her accounting firm to perform an audit.
• C) Verifying information from third parties is not a necessary step in an audit.
• D) The process of preparing a company's annual financial statements is called auditing.

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Definitions:

Creditors

Individuals, businesses, or financial institutions that are owed money by a debtor, typically as a result of extending credit or lending funds.

Bankruptcy Filing

The legal process by which individuals or businesses declare their inability to pay their debts, seeking relief through the restructuring of debts or the liquidation of assets.

Legal Requirements

Regulations or obligations dictated by law that must be adhered to by individuals, organizations, or businesses.

Taxed

The imposition of compulsory levies on individuals or entities by governments in order to finance government activities.