Which of the Following Is Not a Weakness of Analytical

question 18

Multiple Choice

Which of the following is not a weakness of analytical procedures?

• A) Fraudulent financial reporting often reports numbers that appear to be reasonable.
• B) The auditor may have no basis for presuming that the data used is accurate.
• C) Analytical procedures are usually very cost effective.
• D) Improper specification of relationships between the variables used may undermine their effectiveness.
• E) Any audit procedure runs some risk of failing to detect material misstatements.

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Definitions:

Original Principal

The initial amount of money borrowed or invested, not including any interest or earnings.

Inflation

Inflation is the rate at which the general level of prices for goods and services is rising, thereby eroding purchasing power.

Future Date

A specified time in the future, often used in the context of planning, forecasting, or setting deadlines.

Compounded Monthly

A method of calculating interest where the interest is added to the principal amount each month, with each subsequent calculation including the previously accumulated interest.