The Purpose of an Audit Is To

question 43

Multiple Choice

The purpose of an audit is to:

• A) render an opinion on the fairness of the statements.
• B) determine whether or not a company has a good credit risk.
• C) determine whether or not a company complies with income tax regulations.
• D) determine whether or not a company is a good investment.

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Definitions:

Management Functions

Fundamental tasks carried out by managers to achieve organizational goals, typically including planning, organizing, leading, and controlling.

Industry Averages

Statistical metrics that summarize the average performance, behavior, or characteristic of companies within a specific industry.

Relative Position

The placement or rank of something in relation to others based on a specific criteria.

Vertical Analysis

A technique for evaluating financial statement data that expresses each item within a financial statement as a percentage of a base amount.