Auditors sometimes use comparison of ratios as audit evidence. For example, an unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?
A) Unrecorded sales.
B) Merchandise purchases charged to selling and general expense.
C) Fictitious sales.
D) Unrecorded purchases.

Question

Quizplus · Accepted Answer

The Answer of Auditors sometimes use comparison of ratios as audit evidence. For example, an unexplained decrease in the ratio of gross profit to sales may suggest which of the following possibilities?
A) Unrecorded sales.
B) Merchandise purchases charged to selling and general expense.
C) Fictitious sales.
D) Unrecorded purchases.

Auditors Sometimes Use Comparison of Ratios as Audit Evidence