Lithgow and Harris,CPAs,are performing the audit of Wild Flower Grocery Stores.Lithgow and Harris relates annual revenue to sales per square feet and sales per customer.What type of analysis is Lithgow and Harris most likely performing?
A)Ratio analysis.
B)Critical analysis.
C)Reasonableness tests.
D)Nonstatistical analysis.

Question

Quizplus · Accepted Answer

Reasonableness tests involve comparing financial information against benchmarks or industry standards to assess its plausibility. In this case, comparing annual revenue to sales per square foot and sales per customer helps determine if the reported figures are reasonable given the store's size and customer base.

Lithgow and Harris,CPAs,are Performing the Audit of Wild Flower Grocery