The Most Effective and Efficient Audit Approach in the Examination

question 112

Multiple Choice

The most effective and efficient audit approach in the examination of the income statement would be which of the following?

• A) Examine income statement accounts concurrently with the related balance sheet accounts.
• B) Compare company's components of net income to other businesses in the same industry.
• C) Compare company's components of net income to the previous two years.
• D) Examine changes in all balance sheet accounts.

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Definitions:

Causal Order

The sequence in which cause and effect events occur, indicating a relationship where one action or event directly influences another.

Experimental Method

A research methodology that involves manipulating one variable to determine if changes in one variable cause changes in another variable.

Parsimonious Theory

A theory that explains a phenomenon in the simplest terms, using a minimum number of principles or assumptions.

Diverse Observations

Encompasses the act of noticing or perceiving a wide range of different aspects, situations, or behaviors, emphasizing the importance of a broad perspective.