Which of These Tests Would Be the Least Useful When

question 26

Multiple Choice

Which of these tests would be the least useful when using analytical procedures on expenses?

• A) comparing prior year amounts with current year amounts
• B) comparing current year amounts as a percentage of sales with prior year
• C) comparing relationships between related expenses
• D) comparing total expenses to the bank balance at balance date

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Definitions:

Trade-offs

The concept of sacrificing one good or action to obtain another, acknowledging that having more of one thing likely means having less of another.

Expected Value

A calculated average of all possible values in a probability distribution, weighted by their respective chances of occurrence.

Expected Utility

The anticipated value of an outcome, calculated by multiplying the utility of the outcome by the probability of its occurrence.

Risk-averse

Characterized by the preference to avoid risk, leading individuals or entities to choose the option with the least risk when faced with uncertain outcomes.