Calculating the Gross Margin for the Current Year Under Audit

question 75

Multiple Choice

Calculating the gross margin for the current year under audit as a percent of sales and comparing it with previous years is what type of evidence?

• A) physical examination
• B) analytical procedures
• C) observation
• D) inquiry

---

Definitions:

Equity Method

An accounting technique used to assess the earnings attributed to a company's investment in another company, reflecting its share of the investee's profits or losses.

Fair Value Method

An accounting approach where assets and liabilities are assessed and reported at their current market values, rather than their historical cost, reflecting their true economic worth.

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted to reflect the investor's share of the investee's profits and losses.

Dividends Received

Payments shareholders receive from a company’s earnings, typically distributed in cash or additional stocks.