Question: Please provide correct answer and explanation: Auditors sometimes use ratios as audit evidence. For example, an unexplained increase in the ratio of gross profit to

Please provide correct answer and explanation:

Auditors sometimes use ratios as audit evidence. For example, an unexplained increase in the ratio of gross profit to sales may suggest which of the following possibilities?

Fictitious purchases

Fictitious sales

Selling and general expenses erroneously being recorded as merchandise purchases

Unrecorded sales

Which of the following conditions or events most likely would cause an auditor to have substantial doubt about an entitys ability to continue as a going concern?

		Significant related party transactions are pervasive
		Unusual trade credit from suppliers is denied
		Arrearages in preferred stock dividends are paid
		Restrictions on the disposal of principal assets are present

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