The degree of confidence that users place on management's financial statements is higher than that placed on audited financial statements because few users have direct knowledge of the company's operations and management is the most knowledgeable about operations.

Question

Quizplus · Accepted Answer

This statement is incorrect. Users generally have higher confidence in audited financial statements because they are prepared and reviewed by objective third-party auditors who have verified the accuracy and completeness of the financial information. While management may have more direct knowledge of the company's operations, there is a risk of bias or error in their financial reporting.

The Degree of Confidence That Users Place on Management's Financial