Why Is the Auditor's Role in Performing Audits, Important to Our

question 45

Multiple Choice

Why is the auditor's role in performing audits, important to our society?

• A) Auditors issue reports on the accuracy of each financial transaction.
• B) Auditors have the primary responsibility for the information contained in financial statements.
• C) An audit of financial statements helps investors and others to know that they can rely on the information presented in the financial statements.
• D) Auditors provide direct financial advice to potential investors.

---

Definitions:

Profit

The financial gain derived from a business activity after subtracting all expenses, taxes, and costs.

Manufacturing Overhead

Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.

Direct Labor Hours

The time spent by workers directly involved in the production process of goods or services, often used to allocate labor costs to products.

Overapplied

A situation in cost accounting when the allocated or applied costs exceed the actual costs incurred.