Auditors try to identify predictable relationships when using analytical procedures. Relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

Question

Quizplus · Accepted Answer

Choice "D" is correct. Auditors try to identify predictable relationships when using analytical review procedures. Payroll expense is predictable because it is based on objective information (number of employees and pay rates). It can generally be computed directly by the auditor. Choices "A", "B", and "C" are incorrect. These account balances are less predictable because they are affected by other factors. Payable and receivable balances can be affected by cash payments or receipts; advertising expense is subject to management discretion.

Auditors Try to Identify Predictable Relationships When Using Analytical Procedures