Which Ratio Do Auditors Find Useful for Assessing Misstatements in Sales

question 134

Multiple Choice

Which ratio do auditors find useful for assessing misstatements in sales, cost of goods sold, accounts receivable, and inventory?

• A) earnings per share
• B) profit margin
• C) gross profit percent
• D) current ratio

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Definitions:

Sales On Account

Transactions where goods are sold or services are provided with payment to be received at a later date.

Cost Of Goods Sold

The total cost of manufacturing or purchasing the products that were sold during a specific period.

Total Asset Turnover

A financial ratio that measures a company's ability to generate sales from its assets by comparing sales or revenues to its total assets.

Common Stock

A type of equity security that represents ownership in a corporation, providing voting rights and potential dividends to shareholders.