An Example of an Analytical Procedure Is the Comparison Of

question 32

Multiple Choice

An example of an analytical procedure is the comparison of:

• A)financial information with similar information regarding the industry in which the entity operates.
• B)recorded amounts of major disbursements with appropriate invoices.
• C)results of a statistical sample with the expected characteristics of the actual population.
• D)EDP generated data with similar data generated by a manual accounting system.

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Definitions:

Salvage Value

The estimated resale value of an asset at the end of its useful life, used in calculating depreciation expenses.

Annual Depreciation

The portion of the cost of a fixed asset that is expensed each year over its useful life.

Payback Period

The time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment, used as a measure of the investment's risk and profitability.

Discount Rate

The interest rate used to discount future cash flows to their present value, often used in investment appraisal and capital budgeting.