What is the primary objective of an independent audit of financial statements?
Correct answer: B. To provide reasonable assurance on fair presentation
- A. To prepare the entity’s accounting records
- B. To provide reasonable assurance on fair presentation
- C. To detect every instance of fraud
- D. To guarantee the entity’s future profitability
Explanation
An audit provides reasonable assurance that the financial statements are free from material misstatement and are fairly presented. It does not guarantee that every fraud will be found or that the business will remain profitable.
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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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