Before expressing an opinion concerning the results of operations, the auditor would most likely proceed with the examination of the income statement by:
A)applying a rigid measurement standard designed to test for understatement of net income.
B)analyzing the beginning and ending balance sheet inventory amounts.
C)making net income comparisons to published industry trends and ratios.
D)examining income statement accounts concurrently with the related balance sheet accounts.

Question

Quizplus · Accepted Answer

Examining income statement accounts concurrently with the related balance sheet accounts ensures that the financial statements are consistent and accurate. This approach also allows the auditor to identify potential misstatements or errors in both the income statement and balance sheet, which could affect the overall accuracy of the financial statements. Applying a rigid measurement standard or comparing net income to industry trends may be helpful in certain circumstances, but they do not provide the auditor with a comprehensive view of the financial statements. Analyzing inventory amounts may be relevant for certain industries, but it is not necessarily relevant for all companies.

Before Expressing an Opinion Concerning the Results of Operations, the Auditor