There Are Many Types of Analytical Procedures That the Auditor

question 56

Multiple Choice

There are many types of analytical procedures that the auditor can conduct during the planning stage of the financial statement audit.What is the purpose of comparing the gross margin with prior years and looking for large fluctuations?

• A)to understand the client's industry and business
• B)to assess going concern
• C)to identify possible misstatements
• D)to reduce detailed tests

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Definitions:

U.S. Price Level

The general measure of the inflation or deflation of goods and services prices within the United States, impacting purchasing power and economic policy.

Aggregate Demand Curve

A curve that shows the relationship between the overall price level in the economy and the total demand for goods and services, indicating that higher prices typically lead to lower total demand.

Real Value

The value of an object or service adjusted for inflation, reflecting its true purchasing power.

Dollar-Denominated Assets

Financial assets that are valued in U.S. dollars, regardless of where they are located or who owns them.