There Are Many Types of Analytical Procedures That the Auditor

question 33

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 prepaid expenses and related expense accounts with those of prior years?

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

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Definitions:

Money

A medium of exchange, unit of account, and store of value that facilitates transactions and measures the value of goods and services.

Worthless

Describes an item that has no value, utility, or financial gain.

Exercise Price

The specified price on an option contract at which the option holder can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

2-for-1 Split

A stock split in which a company divides its existing shares into two, reducing the price per share while keeping the total market capitalization the same.