An Abnormal Fluctuation in Gross Profit That Might Suggest the Need

question 27

Multiple Choice

An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of:

• A)tests of transactions and balances.
• B)a preliminary review of internal accounting control.
• C)specialised audit programs.
• D)analytical procedures.

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Definitions:

Liable

The condition of being legally accountable for specific actions or responsibilities, particularly in relation to debts or legal duties.

Oral Stop-Payment Order

A verbal instruction to a financial institution to cancel the payment process of a check or transaction.

Good

An item or product that is manufactured or produced for sale, often tangible, and exchanged in the marketplace.

Deposit Agreement

A legal arrangement wherein one party places an asset under the control of another party, often a financial institution, with specific terms governing its management and disposal.