When Auditing Financial Instruments, Analytical Procedures Can Be Used to

question 63

Multiple Choice

When auditing financial instruments, analytical procedures can be used to

• A) test the reasonableness of interest and dividend income.
• B) test the year-end balance.
• C) determine if the financial instruments were properly valued.
• D) determine if the gain or loss on the sales were properly computed.

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Definitions:

Population Proportion

The ratio or fraction of members in a population that have a particular characteristic, often denoted by P.

Sample Proportion

The fraction of the sample that displays a certain property or characteristic.

Null Hypothesis

The null hypothesis is a statement used in statistical testing that proposes there is no significant difference or effect, serving as the default assumption to be tested against.

Level of Significance

The threshold below which a p-value is considered statistically significant, typically set at 0.05 or 5%, indicating the probability of rejecting the null hypothesis when it is true.