Which of the Following Statement Is False Regarding Analytical Procedures

question 4

Multiple Choice

Which of the following statement is false regarding analytical procedures that help auditors assess the overall final presentation of the financial statements?

• A)By performing a final analytical review,the audit firm will identify any unusual,unexpected,or unexplained relationships that should be resolved before the issuance of the audit report.
• B)A basic five-step process for using analytical procedures applies.
• C)Analytical procedures provide evidence on whether certain relationships make sense in light of the knowledge obtained during the audit.
• D)Auditing standards require the use of analytical procedures in the final review phase of the audit to assist in identifying ending account relationships that are unusual.

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Definitions:

Manufacturing Overhead

All costs incurred in the manufacturing process that are not directly associated with the production of goods, such as utilities for the factory.

Pervasive Costs

Costs that are widespread and difficult to directly relate to any specific product or segment of a business.

Factory Overhead

Indirect costs associated with manufacturing, including expenses related to operating the factory like utilities, maintenance, and salaries of support staff.

Manufacturing Cost Category

Classification of costs related to the production process, typically including direct materials, direct labor, and manufacturing overhead.