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

Question

Quizplus · Accepted Answer

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

Auditors Sometimes Use Comparisons of Ratios as Audit Evidence