Which of These Statements Is True

question 13

Multiple Choice

Which of these statements is true?
An audit benefits a company because

• A) It reassures the shareholders that the accounts are accurate
• B) Makes the management accountable to the shareholders
• C) Guarantees that the accounts are free from fraud or error
• D) Guarantees that the financial information shown is true and fair

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Definitions:

Account Payable

Liabilities to suppliers or creditors for goods or services received that have not yet been paid for.

Borrowing Money

The act of obtaining funds from a lender under the agreement to pay back the principal amount along with interest or other charges.

Payroll Expense

Payroll expense is the total amount of wages, salaries, and other compensation that a business pays to its employees over a specific period.

Contra Account

A type of account used in accounting to reduce the value of a related account, creating a net balance that reflects the correct value of the asset or liability.