Analytical procedures can be very effective in detecting inventory fraud. Which of the following analytical procedures would not be useful in detecting fraud?
A) gross margin percentage
B) inventory turnover
C) cost of sales percentage
D) accounts receivable turnover

Question

Quizplus · Accepted Answer

Accounts receivable turnover is not directly related to inventory, so it would not be useful in detecting inventory fraud. However, the other three options are commonly used in analyzing inventory and can be helpful in detecting fraud. Gross margin percentage and cost of sales percentage can be used to identify abnormal fluctuations that may indicate inventory misstatement, while inventory turnover can provide insight into whether inventory is being managed efficiently.

Analytical Procedures Can Be Very Effective in Detecting Inventory Fraud