As a Result of Analytical Procedures Conducted During the Planning

question 18

Multiple Choice

As a result of analytical procedures conducted during the planning phase, the independent auditor determines that the gross profit percentage has declined from 30% in the preceding year to 20% in the current year. The auditor should:

• A)Express an opinion that is qualified due to the inability of the company to continue as a going concern.
• B)Evaluate management's performance in causing this decline.
• C)Require footnote disclosure.
• D)Consider the possibility of an error in the financial statements.

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Definitions:

Account Balances

The amount of money in a financial repository at any given moment, reflecting the net of debits and credits over time.

Documentation

Written or digital materials that provide official information or evidence regarding processes, transactions, or systems.

Journalizing

The process of recording transactions in a journal so that their effects are reflected in the accounting records.

Transaction Data

Information collected about each specific activity that takes place within a business, which can be used for various financial and management analysis purposes.