An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of:
A)tests of transactions and balances.
B)a preliminary review of internal controls.
C)specialized audit programs.
D)analytical procedures.

Question

Quizplus · Accepted Answer

Analytical procedures involve analyzing financial data to identify significant fluctuations or anomalies that may indicate a risk of material misstatement. If an abnormal fluctuation in gross profit is identified during analytical procedures in the planning phase, this may suggest a need for extended audit procedures such as tests of sales and inventory. The other choices may also be important in the planning phase, but they are not specifically focused on identifying abnormal fluctuations in gross profit.

An Abnormal Fluctuation in Gross Profit That Might Suggest the Need