Analytical Procedures Explain Ratio Analysis as an Analytical Procedure Used

question 21

Essay

Analytical Procedures Explain ratio analysis as an analytical procedure used by auditors.Give examples of the ratios that auditor might want to compute for revenue cycle accounts.

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Definitions:

GAAP

Generally Accepted Accounting Principles; a collection of commonly-followed accounting rules and standards for financial reporting.

Allowance Method

An accounting technique used to account for bad debts by estimating uncollectible accounts at the end of each period.

Receivables

Money owed to a business by its customers for goods or services delivered or used but not yet paid for.

Allowance Method

An accounting technique to estimate and account for bad debts, where anticipated uncollectible accounts receivable are predicted and recorded.