Analytical Procedures Enable the Auditor to Predict the Balance or Quantity

question 8

Multiple Choice

Analytical procedures enable the auditor to predict the balance or quantity of an item under audit.Information to develop this estimate can be obtained from all of the following except:

• A) Tracing transactions through the system to determine whether procedures are being applied as prescribed.
• B) Comparison of financial data with data for comparable prior periods, anticipated results (e.g., budgets and forecasts) and similar data for the industry in which the entity operates.
• C) Study of the relationships of elements of financial data that would be expected to conform to a predictable pattern based upon the entity's experience.
• D) Study of the relationships of financial data with relevant nonfinancial data.

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Definitions:

Collateral Bonds

Bonds that are secured by a specific asset or form of collateral, offering more security to bondholders.

Semiannual Interest

Interest that is computed and disbursed semi-annually, commonly linked with loans or bonds.

Journal Entry

A record of financial transactions entered in a journal, a fundamental part of the double-entry bookkeeping system.