What is the main distinction between accounting and auditing?
Correct answer: B. Accounting records and summarizes transactions, while auditing evaluates them
- A. Accounting examines records, while auditing records transactions
- B. Accounting records and summarizes transactions, while auditing evaluates them
- C. Accounting investigates suspected fraud, while auditing prepares ledgers
- D. Accounting issues audit opinions, while auditing prepares trial balances
Explanation
Accounting involves recording, classifying and summarizing financial transactions. Auditing independently examines the resulting records and statements to express an opinion on their reliability and fair presentation.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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