Analytical Procedures Are Most Appropriate When Testing Which of the Following

question 59

Multiple Choice

Analytical procedures are most appropriate when testing which of the following types of transactions?

• A)Payroll and benefit liabilities.
• B)Acquisitions and disposals of fixed assets.
• C)Operating expense transactions.
• D)Long-term debt transactions.

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Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net income or loss.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time.

Direct Method

One of two methods of preparing the net cash flow from operating activities section of the statement of cash flows. Each of the major areas of sources and uses of cash for operations is detailed separately.

Indirect Method

One of two methods of preparing the net cash flow from the operating activities section of the statement of cash flows. Involves converting the accrual basis net income figure from the income statement to the net cash flows from operating activities.