Calculating the gross margin as a percent of sales and comparing it with previous periods is what type of evidence?
A) Analytical procedures.
B) Physical examination.
C) Observation.
D) Inquiries of the client.

Question

Quizplus · Accepted Answer

Analytical procedures involve evaluating financial information by studying plausible relationships among both financial and non-financial data. Calculating and comparing the gross margin as a percent of sales over different periods is a classic example of using analytical procedures to assess the financial health and trends of a business.

Calculating the Gross Margin as a Percent of Sales and Comparing