The basic purpose of audited financial statements is to:
A)Provide the reporting company with assurance that all assets are protected from theft or embezzlement.
B)Prepare financial statements for companies that do not have their own accounting departments.
C)Provide users of the financial statements with assurance that the statements are verifiable and are presented in conformity with generally accepted accounting principles.
D)Provide both the reporting company and the users of the statements with a written guarantee that the statements are error-free.

Question

Quizplus · Accepted Answer

The basic purpose of audited financial statements is to provide users of the financial statements with assurance that the statements are verifiable and are presented in conformity with generally accepted accounting principles. The auditors do not provide a guarantee that the statements are error-free, but rather give an opinion on whether the statements are presented fairly and in accordance with accounting principles. Option A is not the main purpose of audits, but may be a secondary benefit. Option B is not correct because companies with their own accounting departments still require audited financial statements for external reporting purposes.

The Basic Purpose of Audited Financial Statements Is To