Auditing is the independent evaluation of financial statements, which involves examining and expressing an opinion on the fairness of the financial statements. This is usually carried out by a Certified Public Accountant (CPA) to ensure that the financial statements comply with Generally Accepted Accounting Principles (GAAP) and are free from material misstatement. The other options do not accurately describe the nature of auditing.

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Auditing Is

Question 200

Multiple Choice

Auditing is

A) the examination of financial statements by a CPA in order to express an opinion on their fairness.
B) a part of accounting that involves only the recording of economic events.
C) an area of accounting that involves such activities as cost accounting, budgeting, and accounting information systems.
D) conducted by the Securities and Exchange Commission to ensure that registered financial statements are presented fairly.

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