Which of the Following Is the Essential Purpose of the Audit

question 6

Multiple Choice

Which of the following is the essential purpose of the audit function?

• A)Detection of fraud
• B)Examination of individual transactions to certify as to their validity
• C)Determination of whether the client's financial statement assertions are fairly state
• D)Assurance of the consistent application of correct accounting procedures

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Definitions:

Capital Accounts

Financial records showing the ownership interests and funds contributed or withdrawn by owners or investors in a company.

Target Capital Structure

The ideal mix of debt, preferred stock, and common equity that a company aims to hold in order to minimize its cost of capital and maximize its value.

Floatation Costs

Expenses incurred by a company in issuing new securities, including underwriting fees and registration fees.

WACC

Weighted Average Cost of Capital - a measure of a firm's cost of capital in which each category of capital is proportionately weighted.