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:

Stice and Colleagues

Researchers known for their contributions to a specific field, though the term requires more context to identify the specific area of expertise or study.

Weight Concerns

Anxiety or worry related to one's body weight or body shape, often leading to behaviors aimed at managing or altering physical appearance.

Price-support Programs

Government initiatives aimed at maintaining the market price of agricultural products by buying up surplus stock or providing subsidies.

Agricultural

Relating to the science or practice of farming, including cultivation of the soil for the growing of crops and the rearing of animals to provide food, wool, and other products.