Which of the Following Is Accurate Regarding the Comparison of Client

question 155

Multiple Choice

Which of the following is accurate regarding the comparison of client data?

• A) Since budgets are only projections, auditors can ignore the differences between budgeted and actual results.
• B) One approach to overcome the limitations of industry averages is to compare the client to one or more benchmark firms in the industry.
• C) It is impractical to relate one account balance to another balance sheet or income statement account.
• D) It is extremely difficult to get industry data for comparative purposes.

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Definitions:

Traceable Fixed Expense

Fixed costs that can be directly associated with a specific product, department, or segment of the business.

Net Operating Income

The total profit of a business after operating expenses but before deducting taxes and interest.

Sales Forecast

An estimate of the amount of products or services a company expects to sell during a specific period, based on historical data, market analysis, and other factors.

Unit Sales

The quantity of items or products sold, not taking into account the revenue generated from these sales.