A Limitation of Using Ratio Analysis in an Audit Engagement

question 171

Multiple Choice

A limitation of using ratio analysis in an audit engagement is that it:

• A) Often uses financial information provided by management which has not been reviewed for reliability and validity.
• B) Is an expensive method of testing.
• C) Requires computer software in order to develop meaningful interpretations of data.
• D) Is useful only when comparisons can be made across other industries.

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Definitions:

Programmed Contact

A virtual representation of a physical contact in a PLC program, which can be turned on or off based on program logic.

JMP Instruction

A command used in computer programming to cause the execution flow to jump to a different part of the program or subroutine.

JSR Command

In programming, the JSR (Jump to Subroutine) command is used to jump from the current code to a subroutine, execute it, and then return to the original point in the code sequence, often found in assembly language or PLC programming.

MCR Command

Stands for Master Control Reset, a command in automation and control systems that resets the operation or process to a default or initial state.