Which of the Following Statements Is True Regarding Preliminary Analytical

question 107

Multiple Choice

Which of the following statements is true regarding preliminary analytical procedures for debt obligations and stockholders' equity transactions?

• A) Trend analysis would not typically be performed for debt obligations.
• B) The long-term debt to equity ratio could be considered by the auditor as part of the preliminary analytical procedures.
• C) Because there are typically only a few stockholders' equity transactions, the auditor is not required to perform preliminary analytical procedures for stockholders' equity accounts.
• D) If unusual or unexpected relationships are identified by preliminary analytical procedures, the auditor should stick with the original expectations of misstatements, because this could be an anomaly and bias the audit overall.

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Definitions:

Physiological Arousal

A state of physical alertness or excitement, which can be triggered by emotions, thoughts, or external stimuli, affecting bodily functions.

Fight-or-flight Response

A physiological reaction that occurs in response to a perceived harmful event, attack, or threat to survival.

Walter Cannon

A physiologist who coined the term "fight or flight" to describe the body's response to stress, and made significant contributions to understanding the autonomic nervous system.

Catecholamines

Biochemical compounds, including dopamine, norepinephrine, and epinephrine, that function as neurotransmitters and hormones, significantly affecting the body's stress response.