There Are Many Types of Analytical Procedures That the Auditor

question 40

Multiple Choice

There are many types of analytical procedures that the auditor can conduct during the planning stage of the financial statement audit.What is the purpose of calculating key ratios for the client's business and comparing them with industry averages?

• A)to understand the client's industry and business
• B)to assess going concern
• C)to indicate possible misstatements
• D)to reduce detailed tests

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Definitions:

Net Operating Income

An evaluation of a business's core operating income, omitting the effects of interest and tax expenses.

Price Reduction

A decrease in the selling price of a product or service, often to stimulate demand or respond to competition.

Sales Forecast

A projection of future sales revenue, based on historical data, market analysis, and other factors.

Unit Sales

Unit Sales refer to the quantity of individual items or products sold within a specific period, used as a measure of business performance.