One typical difference between the asset prepaid expenses and other assets, such as accounts receivable and inventory, is the immateriality of the former in many audits. Because of this immateriality, frequently the only audit procedure necessary to perform is:
A) analytical procedures.
B) tests of transactions.
C) tests of control.
D) tests of details of balances.

Question

Quizplus · Accepted Answer

Analytical procedures are generally sufficient for prepaid expenses since they are typically immaterial in nature. Analytical procedures involve analyzing variances and relationships in financial information to identify potential misstatements. Tests of transactions, tests of control, and tests of details of balances are more appropriate for significant account balances, such as accounts receivable and inventory.

One Typical Difference Between the Asset Prepaid Expenses and Other