A Typical Objective of a Performance Audit Is for the Auditor

question 20

Multiple Choice

A typical objective of a performance audit is for the auditor to:

• A) determine whether the financial statements fairly present the entity's operations.
• B) make recommendations for improving operational performance.
• C) report on the entity's relative success in attaining profit maximisation.
• D) evaluate the feasibility of attaining the entity's operational objectives.

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Definitions:

Owner's Capital

The amount of money and other assets contributed by the owner(s) to a business, plus the retained earnings minus any withdrawals.

Accounts Receivable

Amounts owed to a business by its customers for goods or services sold on credit.

Subsidiary Ledger

A detailed ledger that contains the individual accounts needed to support a major ledger account, such as accounts receivable, where individual customer accounts are detailed.

Control Account

An account used in the general ledger to summarize and keep track of transactions relating to a specific aspect of a company's finances, such as accounts receivable or payable.