Auditors often use analytical procedures in gathering audit evidence. For example, an unexplained decrease in the amount of accounts receivable may indicate:
A) Sales were overstated.
B) Inventory purchases were curtailed.
C) Cost of Goods sold was overstated.
D) Accounts Receivables were sold.

Question

Quizplus · Accepted Answer

An unexplained decrease in accounts receivable could indicate that the receivables were sold, as this would remove them from the balance sheet without a corresponding collection of cash.

Auditors Often Use Analytical Procedures in Gathering Audit Evidence