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Comparing the current-year gross margin with the prior-year gross margin to determine if cost of sales...

Comparing the current-year gross margin with the prior-year gross margin to determine if cost of sales is reasonable during an audit would be a type of:

A. Tests or transactions

B. Analytical procedure

C. Test of controls

D. Test of details

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Answer #1

Answer :B. Analytical procedure

Auditors engage in analytical procedures as partt of an audit engagement. Comparison of current year margin with the prior-year gross margin to determine if cost of sales is reasonable is an analytical procedure.If the result of the comparison is materially different from expectations, the auditor communicates it with management.

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