An auditor calculates the current ratio of the company to determine its ability to pay off its current financial obligation.This is an example of
A)review of the documentation.
B)vouching.
C)confirmation.
D)analytical review.

Question

Quizplus · Accepted Answer

The auditor calculating the current ratio of the company is an example of analytical review, which involves the comparison of financial information across different periods or against industry benchmarks. This helps the auditor identify any unusual or unexpected changes in the financial statements and investigate them further. Review of documentation, vouching, and confirmation are other audit procedures that are used to test the accuracy and completeness of financial information, but they do not specifically involve the calculation of a financial ratio like the current ratio.

An Auditor Calculates the Current Ratio of the Company to Determine