Which of the Following Statements Is True Regarding Preliminary Analytical

question 107

Multiple Choice

Which of the following statements is true regarding preliminary analytical procedures for debt obligations and stockholders' equity transactions?

• A) Trend analysis would not typically be performed for debt obligations.
• B) The long-term debt to equity ratio could be considered by the auditor as part of the preliminary analytical procedures.
• C) Because there are typically only a few stockholders' equity transactions, the auditor is not required to perform preliminary analytical procedures for stockholders' equity accounts.
• D) If unusual or unexpected relationships are identified by preliminary analytical procedures, the auditor should stick with the original expectations of misstatements, because this could be an anomaly and bias the audit overall.

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Definitions:

Variables

Any factor, trait, or condition that can exist in differing amounts or types and can influence the outcome of experiments or studies.

Cause

A factor or event that brings about a specific effect, outcome, or result, often examined in contexts of cause and effect relationships.

Positively Correlated

A relationship between two variables where one variable increases as the other also increases.

Height

The measurement of someone or something from head to foot or from base to top.