Which Substantive Analytical Procedure Would Help Determine If There Are

question 127

Multiple Choice

Which substantive analytical procedure would help determine if there are unrecorded or nonexistent accounts?

• A) Review the list of accounts payable for unusual items.
• B) Compare acquisition-related expense account balances with prior years.
• C) Calculate ratios, such as accounts payable divided by current liabilities.
• D) Calculate ratios, such as sales divided by gross profit.

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Definitions:

Inventory Turnover

A measure of the liquidity of inventory; computed by dividing cost of goods sold by average inventory.

Liquidity

The ability of an asset to be quickly converted into cash or the ability of a company to meet its short-term financial obligations.

Federal Government

The national government of a federated state, which holds the authority to govern at a national level, possessing powers typically outlined in a constitution.

Stockholders

Individuals or entities that own shares in a corporation, granting them certain rights and interests in the company's performance and governance.