Auditors Sometimes Use Comparison of Ratios as Audit Evidence

question 2

Multiple Choice

Auditors sometimes use comparison of ratios as audit evidence. For example, an unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?

• A) Unrecorded sales.
• B) Merchandise purchases charged to selling and general expense.
• C) Fictitious sales.
• D) Unrecorded purchases.

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Definitions:

Balanced Perspective

An approach that involves looking at issues or situations from multiple viewpoints to make more informed and rounded decisions.

Burned-Out Samaritans

Individuals who have become emotionally exhausted and less effective in their roles as caregivers or helpers due to prolonged stress and overcommitment.

Mismatched People

Individuals whose skills, values, or personality traits do not align well with their job or team environment.