As a Result of Analytical Procedures, the Independent Auditor Determines

question 13

Multiple Choice

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

• A)express an opinion that is modified due to the inability of the client 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 report.

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Definitions:

Potential GDP

The maximum possible level of output an economy can produce without triggering inflation, assuming full employment and optimal use of resources.

Fiscal Policy

Government policies on taxation and spending that are used to influence the economy.

Federal Spending

The expenditure of funds by a government to support its programs and policies.

Federal Budget

The government's estimate of revenue and expenditures for a forthcoming fiscal year, outlining how federal funds are allocated among different programs and services.