The Application of Analytical Procedurto the Audit of Inventoriis Often

question 9

Multiple Choice

The application of analytical procedurto the audit of inventoriis often:

• A) not very useful.
• B) the only procedure necessary.
• C) a requirement of the standards.
• D) used extensively.

Recognize how prior period adjustments are accounted for and their impact on retained earnings.

Calculate savings given consumption, disposable income, and autonomous consumption.

Understand the effect of changes in the Average Propensity to Save (APS) on total savings.

Analyze historical changes in consumer spending patterns.

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Definitions:

Stockholders' Equity

The stake in a company's assets left over after all debts have been cleared, frequently called shareholders' equity.

Revenues

Income that a company receives from its normal business activities, usually from the sale of goods and services to customers.

Gains

Result primarily from the disposal of assets for more than their cost minus the amount of cost depreciated in the past.

Net Assets

The total assets of an organization minus its total liabilities, indicating the net worth or equity of the company.