The Main Purpose of an Audit Is to Assure Users

question 65

Multiple Choice

The main purpose of an audit is to assure users of the financial information about the:

• A)Effectiveness of the internal controls of the company
• B)Selection of the proper GAAP when preparing financial statements
• C)Proper application of GAAS during the examination
• D)Accuracy and completeness of the information

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Definitions:

Debt-to-Equity Ratio

A financial metric that shows the balance between the equity provided by shareholders and the debt leveraged to support a company's assets.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available for its day-to-day operations.

Long-term Liabilities

Financial obligations of a business that are due more than one year in the future, such as bonds payable or long-term loans.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.