Multiple Choice Questions
The following questions concern the use of analytical procedures during an audit. Select the best response.
a. Analytical procedures used in planning an audit should focus on identifying
(1) Material weaknesses in internal control.
(2) The predictability of financial data from individual transactions.
(3) The various assertions that are embodied in the financial statements.
(4) Areas that may represent specific risks relevant to the audit.
b. For all audits of financial statements made in accordance with auditing standards, the use of analytical procedures is required to some extent

c. Which of the following is least likely to be comparable between similar corporations in the same industry line of business?
(1) Accounts receivable turnover
(2) Earnings per share
(3) Gross profit percent
(4) Return on assets before interest and taxes
d. Which of the following situations has the best chance of being detected when a CPA compares 2011 revenues and expenses with the prior year and investigates all changes exceeding a fixed percent?
(1) An increase in property tax rates has not been recognized in the company's 2011 accrual.
(2) The cashier began lapping accounts receivable in 2011.
(3) Because of worsening economic conditions, the 2011 provision for uncollectible accounts was inadequate.
(4) The company changed its capitalization policy for small tools in2011.

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In the Planning Stage Yes No No Yes As a Substantive Test No Yes Yes No In the Completion Stage Yes No Yes No