Question

Auditors sometimes use ratios as audit evidence. For example an unexplained INCREASE in the ratio of...

Auditors sometimes use ratios as audit evidence. For example an unexplained INCREASE in the ratio of gross profit to sales may suggest which of the following possibilities?

a. Fictitious purchases.

b. Unrecorded purchases.

c. Unrecorded sales.

d. Selling expense recorded as general expense.

Homework Answers

Answer #1

Comment below if you have any query i will solve it asap !! thanks

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. In the planning stage of an audit, auditors frequently consider certain financial ratios. For either...
1. In the planning stage of an audit, auditors frequently consider certain financial ratios. For either of the following two ratios, which are at unusual levels, please state one kind of error or fraud which would explain why the ratio is at an unusual level this year. Ratio #1 The number of days of sales in accounts receivable has increased from 35 to 60. The industry average is 34. [Days of sales in accounts receivable = {ending accounts receivable /sales}*365]...
Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit...
Auditors frequently refer to the terms principles and procedures. Required: Auditors use different types of audit procedures to gather the evidence necessary to conclude that the risk of material misstatement for each relevant assertion has been reduced to an acceptably low level. Identify the type of procedure used by auditors for each of the following examples. (1) Find brokers' invoices and canceled checks showing agreement with record amounts for securities investments. (2) Observe test counting of client's physical inventory taking...
An important aspect of analyzing a client’s information is the use of ratios. Which one of...
An important aspect of analyzing a client’s information is the use of ratios. Which one of the following statements is true? Question 14 options: a) The proper ratios to use to determine if a company can meet existing obligations as they become due are the debt-to-equity and profit margin ratios. b) The most useful analytical tools to assess long-run solvency include the debt-to-equity ratio. c) When return on equity or return on investments is the critical concern, the most useful...
1. In communications with clients, when should CPAs refer to themselves as auditors: a) During any...
1. In communications with clients, when should CPAs refer to themselves as auditors: a) During any type of engagement (Assurance or Attestation) b) Only for review and audit attestation engagements c) Only for audit attestation engagements d) For all compilation, review and audit engagements 2. A compilation report that omits substantially all notes and disclosures: a) Is not allowed b) Includes an adverse opinion c) Must indicate that management has elected to omit such information d) Includes a qualified opinion...
14-22 (Objectives 14-2 , 14-3) The following questions deal with internal control and audit evidence in...
14-22 (Objectives 14-2 , 14-3) The following questions deal with internal control and audit evidence in the sales and collection cycle. Choose the best response. 1.Tracing shipping documents to sales invoices provides evidence that a. sales billed to customers were actually shipped. b.shipments to customers were properly invoiced. c. shipments to customers were recorded as sales. d. all goods ordered by customers were shipped. 2. Which of the following procedures most likely represents an internal control designed to reduce the...
1.Jackson Manufacturing Company had a beginning inventory of $30,000. During the year, the company recorded inventory...
1.Jackson Manufacturing Company had a beginning inventory of $30,000. During the year, the company recorded inventory purchases of $90,000 and cost of goods sold of $100,000. The ending inventory must equal: a.$54,000. b.$52,000. c.$20,000. d.$50,000. 2.Assuming the perpetual inventory system is used, which of the following statements about the multistep income statement is correct? a.Contra-revenue accounts increase Other Expenses. b.Sales discounts affect the calculation of Gross Profit. c.Sales discounts are a Selling, General, and Administrative Expense. d.Contra-accounts affect the Cost...
1. Alpha Company uses the periodic inventory system and had the following inventory & sales activity...
1. Alpha Company uses the periodic inventory system and had the following inventory & sales activity for the month of May 2016: Date Activity Quantity Unit Price 5/1 Beginning Inventory 175 $10 5/5 Purchase 200 $12 5/15 Purchase 300 $15 5/25 Purchase 150 $16 Sales were 525 units at $20.  Using the LIFO method, determine the dollar values following for the month of May: 1. Ending Inventory 2. Cost of Goods Available for Sale 3. Cost of Goods Sold 2. The...
Section 5: Subsidiary 5 – General Machinery Company Limited (Case for Audit Partner) General Machinery Company...
Section 5: Subsidiary 5 – General Machinery Company Limited (Case for Audit Partner) General Machinery Company Limited, a subsidiary company of Las Vegas Group Corporation (USA) Limited, is primarily a distributor of a range of machinery and equipment and also engages in other business activities. It has assets of approximately $4m, including current assets of nearly $2m. The draft Statement of Financial Performance of the company has just been completed by the company accountant and presented to the auditors, Disneyland...
Use the information from the following Income Statement to create and Projected Income Statement and solve...
Use the information from the following Income Statement to create and Projected Income Statement and solve the questions at bottom of the page. Complete the Income State to reflect the expected sales increase, then also complete the grey cells at the bottom of the page. Complete the other two spreadsheets in this workbook and after doing all the calculations discuss the impact of variable versus fixed expenses. Include in your conclusion which company you think is in the better financial...
Directions: Ratio Calculation, use formulas to calculate the following financial indicators for each year of data:...
Directions: Ratio Calculation, use formulas to calculate the following financial indicators for each year of data: o Current ratio o Debt/equity ratio o Free cash flow o Earnings per share o Price/earnings ratio o Return on equity o Net profit margin o Describe how and why each of the ratios has changed over the three-year period. For example, did the current ratio increase or decrease? Why? Describe how three of the ratios you calculated for your company compare to the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT