Which of the Following Statements About External Company Auditors Is

question 35

Multiple Choice

Which of the following statements about external company auditors is NOT true?

• A) External company auditors provide assurance that the financial statements audited by them contain no mistakes.
• B) External company auditors cannot credibly audit statements they have prepared.
• C) External company auditors must be independent.
• D) All of the above statements are true.

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Definitions:

Competitive Markets

Competitive markets are characterized by many buyers and sellers, allowing for free and open competition which dictates prices and quality of goods and services.

Economies Of Scale

The property whereby long-run average total cost falls as the quantity of output increases.

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.

Business-stealing Externality

A situation where a new entrant in a market captures a portion of the incumbent firms' customers, causing economic losses to existing businesses.