An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of:
A)tests of transactions and balances.
B)a preliminary review of internal accounting control.
C)specialised audit programs.
D)analytical procedures.

Question

Quizplus · Accepted Answer

Analytical procedures involve the evaluation of financial information using comparisons and relationships to identify potential issues, such as abnormal fluctuations in gross profit. These procedures are typically performed in the planning phase of the audit to identify areas that require further audit procedures. Tests of transactions and balances, preliminary reviews of internal accounting controls, and specialised audit programs may also be used in the planning phase, but they are less likely to identify abnormal fluctuations in gross profit specifically.

An Abnormal Fluctuation in Gross Profit That Might Suggest the Need