Auditors Sometimes Use Comparisons of Ratios as Audit Evidence

question 3

Multiple Choice

Auditors sometimes use comparisons of ratios as audit evidence. An unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?

• A)Unrecorded purchases.
• B)Unrecorded sales.
• C)Merchandise purchases being charged to selling and general expense.
• D)Fictitious sales.

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Definitions:

Molecular Polarity

A measure of how evenly electric charges are distributed in a molecule, affecting its interactions with other molecules.

Polar Molecule

A molecule featuring a distribution of electrical charge leading to one end being slightly positive and the other end slightly negative.

Molecular Polarity

This concept describes the distribution of electrical charge over the atoms joined by chemical bonds in a molecule, determining the molecule’s overall polarity.

Polar Molecule

A molecule with an uneven distribution of charge due to differences in electronegativity between bonded atoms, resulting in a dipole moment.