Calculating the gross margin for the current audit year 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

Question

Quizplus · Accepted Answer

Calculating the gross margin as a percent of sales and comparing it with previous years is an example of analytical procedures, which involve evaluating relationships between financial and non-financial data. It is not physical examination (inspecting tangible assets), observation (watching a process), or inquiry (asking questions of management).

Calculating the Gross Margin for the Current Audit Year as a Percent