Which of the Following Best Describes the Main Reason That

question 37

Multiple Choice

Which of the following best describes the main reason that independent auditors report on management's financial statements?

• A) Management fraud may exist, and it is likely to be detected by independent auditors.
• B) The management that prepares the statements and the persons who use the statements may have conflicting interests.
• C) Misstated account balances may be corrected as the result of the independent audit work.
• D) The management that prepares the statements may have a poorly designed system of internal control.

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Definitions:

Implied Contract

a contract formed by the actions, behavior, or circumstances of the parties involved, rather than written or spoken words.

Void Contract

A contract that lacks legal validity, making it unenforceable and as if it never existed from the onset.

Voidable Contract

A valid agreement that may be legally voided at the option of one of the parties due to certain conditions such as fraud or duress.

Contract in Place

An existing agreement that has been formally established and is legally binding.