Analytical Procedures Are Audit Methods of Evaluating Financial Statement Accounts

question 67

Multiple Choice

Analytical procedures are audit methods of evaluating financial statement accounts by studying and comparing relationships among financial and nonfinancial data. The primary purpose of analytical procedures conducted during the planning stages is to:

• A)identify the appropriate schedules to be prepared by the client.
• B)identify the types of errors or frauds that can occur in transactions.
• C)identify unusual conditions that deserve additional audit effort.
• D)determine the existence of unrecorded liabilities or overstated assets.

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Definitions:

Differential Revenue

The difference in revenue between two alternative decisions or courses of action.

Course of Action

A plan or strategy that an organization or individual intends to follow to achieve a specific goal.

Alternative

An option or choice that serves as a substitute to a decision or course of action.

Intermediate Product

Goods that are produced and used as inputs in the production of other goods, rather than being sold directly to consumers.