The Basic Purpose of an Audit Is To

question 103

Multiple Choice

The basic purpose of an audit is to:

• A)Assure outsiders that financial statements are prepared in conformity with GAAP.
• B)Provide as much useful information to decision makers as possible,regardless of cost.
• C)Record changes in the financial position of an organization by applying the concepts of double entry accounting.
• D)Meet an organization's need for accounting information as efficiently as possible.

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Definitions:

Marginal Resource Cost

Marginal Resource Cost is the additional cost incurred by obtaining one more unit of a resource, such as labor or raw materials, used in the production of goods and services.

Profits

The financial gain realized when the revenues from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

MRP Curve

Short for Marginal Revenue Product curve, which represents the additional revenue a firm earns by employing one more unit of input, assuming other factors remain constant.

Imperfectly Competitive

Describes markets where the conditions necessary for perfect competition are not met, due to factors like monopolies, oligopolies, or monopolistic competition.