Accounting Multiple Choice Question – 21 October 2025

Which ONE of the following describes a manifestation of the expectations gap?

Select ONE answer:

1. Users are not blaming the auditors for a fraud discovered in a company after an audit
2. Users are discovering that the directors refuse to cooperate in providing the auditor with the evidence he requests
3. Shareholders approve the appointment of the auditor at an annual general meeting
4. Users rely on the audited financial statements as a fair valuation of the company

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct => Users should not just rely on the audited financial statements as a fair valuation of the company and must do other due diligence activities, such as looking at forward-looking cash flows.

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