"Use of comparisons and relationships to determine whether account balances or other data appear reasonable" is a definition of
A)auditing.
B)tests of balances.
C)tests of controls.
D)analytical procedures.

Question

Quizplus · Accepted Answer

The described activity is known as analytical procedures, which are used by auditors to assess the reasonableness of financial statement balances or other data by analyzing relationships between different accounts or comparing data to industry averages or prior periods. Thus, D is the correct choice. Tests of balances and tests of controls are specific audit procedures that may be performed as part of the overall audit, but they are not the same as analytical procedures. Auditing is the overall activity of assessing the accuracy and completeness of financial information, which includes the use of analytical procedures along with other tests and techniques.

"Use of Comparisons and Relationships to Determine Whether Account Balances