An auditor is performing an analytical procedure that involves comparing a client's ratios with other companies in the same industry.This technique is referred to as:
A)Vertical analysis.
B)Horizontal analysis.
C)Cross-sectional analysis.
D)Comparison analysis.

Question

Quizplus · Accepted Answer

Cross-sectional analysis involves comparing a client's ratios with other companies in the same industry, which is exactly what is described in the scenario. Vertical analysis involves analyzing a company's financial statements by examining percentage relationships among various financial statement accounts for a single year, while horizontal analysis involves comparing a company's financial data from different periods to identify trends over time. Comparison analysis is a broad term that can refer to any type of analytical procedure used to compare financial data.

An Auditor Is Performing an Analytical Procedure That Involves Comparing