An Abnormal Fluctuation in Gross Profit That Might Suggest the Need

question 60

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 risk assessment phase of the audit by the use of:

• A) Tests of transactions and balances.
• B) An assessment of internal control.
• C) An audit time budget.
• D) Analytical procedures.

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Definitions:

Stockholder

An individual, company, or entity that owns at least one share in a company, giving them partial ownership.

Outstanding Stock

Refers to the shares of a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares.

Authorized

Officially approved or permitted, often used in the context of legal or corporate permissions.

Issued

refers to securities, stocks, or bonds that have been officially released or sold by a company to investors.