Which of the Following Best Describes Why an Independent Auditor

question 17

Multiple Choice

Which of the following best describes why an independent auditor is asked to express an opinion on the fair presentation of financial statements?

• A)It is difficult to prepare financial statements that fairly present a company's financial position and changes in cash flows without the expertise of an independent auditor.
• B)It is management's responsibility to seek available independent aid in the appraisal of the financial information shown in its financial statements.
• C)The opinion of an independent party is needed because a company is not likely to be considered objective with respect to its own financial statements.
• D)It is a customary courtesy that all stockholders of a company receive an independent report on management's stewardship in managing the affairs of the business.

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Definitions:

Ordinary Simple Interest

A method for calculating the interest charge on a loan or investment based on the original principal, rate, and length of time, without compounding.

360-Day Year

A financial calculation assumption where the year is considered to have 360 days for simplifying interest related calculations.

Ordinary Simple Interest

Interest calculated on the principal amount of a loan or investment based on a simple interest rate, without the compounding factor.

360-Day Year

An accounting approximation that treats all months as having 30 days, used in calculating interest with a simplified approach.