Which of the following is most likely to be considered an analytical procedure?
A)Testing purchases at year-end to determine they were recorded in the proper period.
B)Comparing inventory balances to recent sales activities.
C)Selecting a sample of year-end receivables for confirmation.
D)Reconciling physical counts of inventory to perpetual records.

Question

Quizplus · Accepted Answer

Analytical procedures involve evaluating relationships between financial and non-financial data to identify potential issues or anomalies. Comparing inventory balances to recent sales activities is an example of an analytical procedure because it involves analyzing the relationship between two financial data points to identify potential issues or anomalies. The other options are more traditional audit procedures, such as testing the accuracy of recorded transactions (Option A), confirming balances (Option C), or reconciling records (Option D).

Which of the Following Is Most Likely to Be Considered