Auditors Sometimes Use Ratios as Audit Evidence

question 83

Multiple Choice

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

• A)Fictitious purchases.
• B)Fictitious sales.
• C)Selling and general expenses erroneously being recorded as merchandise purchases.
• D)Unrecorded sales.

---

Definitions:

Attitudes

Attitudes are psychological tendencies expressed by evaluating a particular entity with some degree of favor or disfavor.

Experiencing

is the act of going through an event or situation, thereby gaining knowledge or skill from direct participation or observation.

Judging

The cognitive process of forming an opinion or conclusion about something or someone, based on information, observations, or experiences.

Emotional Dissonance

A conflict or inconsistency between experienced emotions and the emotions one expresses in response to societal norms.