Problem

An entity’s income statements were misstated due to the recording of journal entries that...

An entity’s income statements were misstated due to the recording of journal entries that involved debits and credits to an unusual combination of expense and revenue accounts. Auditors most likely could have detected this irregularity by

A. Tracing a sample of journal entries to the general ledger.

B. Evaluating the effectiveness of the internal control policies and procedures.

C. Investigating the reconciliations between controlling accounts and subsidiary records.

D. Performing analytical procedures designed to disclose differences from expectations.

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