An Auditor Compared the Current-Year Gross Margin with the Prior-Year

question 73

Multiple Choice

An auditor compared the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable. What type of audit procedure was performed?

• A) Test of transactions.
• B) Analytical procedures.
• C) Test of controls.
• D) Test of details.

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Definitions:

Crude Oil

Unprocessed petroleum, a natural fossil fuel consisting primarily of hydrocarbons.

Production of Gasoline

The industrial process of converting crude oil into gasoline, a primary fuel for vehicles, through various refining techniques.

Price of Gasoline

The cost per unit of gasoline, often influenced by oil prices, taxes, and supply-demand dynamics.

Marginal Revenue Product of Labor

The additional revenue generated by employing one more unit of labor, holding all other inputs constant.