Auditors Try to Identify Predictable Relationships When Using Analytical Procedures

question 219

Multiple Choice

Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

• A) Accounts payable.
• B) Advertising expense.
• C) Accounts receivable.
• D) Payroll expense.

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Definitions:

Operating Activities

Business actions that relate to the day-to-day operations, producing revenue and spending money to operate the business.

Accounts Receivable

Financial obligations of customers to a firm for received goods or services that have not been paid for.

Merchandise Inventory

The collection of goods a company has in stock and available for sale to customers.

Accounts Receivable

Funds that customers owe to a business for products or services that have been provided but remain unpaid.