What Is the Purpose of an Audit

question 64

Multiple Choice

What is the purpose of an audit?

• A) To establish that a corporation's shares are a sound investment.
• B) To lend credibility to an entity's financial statements.
• C) To endorse the quality of leadership that managers provide for a corporation.
• D) To prove the accuracy of an entity's financial statements.

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Definitions:

Note Receivable

A financial asset representing the right to receive a specific amount of money, either on demand or at a specified future date.

Company's Records

Documentation and files that contain important information about a company's operations, financial transactions, and legal obligations.

Outstanding Checks

Checks that have been written and recorded in the issuing entity's accounting system but not yet cashed or cleared by the bank.

Bank Statement

A document issued by a bank detailing all transactions in an account over a specified period, including deposits, withdrawals, and fees.