Calculating the gross margin for the current year under audit as a percent of sales and comparing it with previous years is what type of evidence?
A)Physical examination
B)Analytical procedures
C)Observation
D)Inquiry

Question

Quizplus · Accepted Answer

Calculating the gross margin for the current year as a percent of sales and comparing it with previous years is an example of analytical procedures, which involves evaluating financial information through analysis of plausible relationships between financial and non-financial data. Physical examination involves inspecting tangible assets, observation involves viewing a process or procedure being performed, and inquiry involves asking questions to obtain information.

Calculating the Gross Margin for the Current Year Under Audit