An entity's income statements were misstated due to the recording of a journal entry that involved debits and credits to an unusual combination of expense and revenue accounts.The auditor is most likely to detect this irregularity by ________.
A)tracing a sample of journal entries to the general ledger
B)evaluating the effectiveness of the internal control system policies and procedures
C)investigating the reconciliation of control accounts with the subsidiary records
D)performing analytical procedures designed to disclose differences between the balances in the accounts and budgeted amounts

Question

Quizplus · Accepted Answer

Analytical procedures, which involve comparing actual account balances with expected amounts (such as budgeted amounts), can help identify discrepancies that may indicate misstatements, including those arising from unusual journal entries affecting revenue and expense accounts.

An Entity's Income Statements Were Misstated Due to the Recording