Inquiries of clients and reperformance normally have a low cost to perform.True FalseWhen analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of details of balance for that account.True FalseWhen analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of controls for that account.True FalseAnalytical procedures can be used to provide reliable evidence for all balance-related general audit objectives.True FalseOne advantage of using statical techniques when performing analytical procedures is that they eliminate the need for auditor judgement.True FalseThe type of audit evidence known as documentation involves the auditor’s examination of tangible assets with results of the examination being recorded, or “documented,” in the auditor’s work papers.TrueFalseIf a company’s cash ratio is greater than 1.0, the company is considered to have excellent short -term debt-paying ability.TrueFalseThe inventory turnover ration is a useful measure of a company’s short-term liquidity.True FalseA company’s debt-to-equity ratio that is too low normally indicates the company has used up its borrowing capacity.True FalseEarnings per share and the efficiency ratio are two examples of “operating and performance” ratiosTrue FalseIf the return (before taxes) on common equity ratio is too low, investors (owners) might perceive that they should convert the company’s assetsTrueFalse

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Answered: Inquiries of clients and reperformance…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Inquiries of clients and reperformance normally have a low cost to perform.
1. True
2. False
When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of details of balance for that account.
1. True
2. False
When analytical procedures reveal no unusual fluctuations in an account balance, the auditor will probably perform fewer test of controls for that account.
1. True
2. False
Analytical procedures can be used to provide reliable evidence for all balance-related general audit objectives.
1. True
2. False
One advantage of using statical techniques when performing analytical procedures is that they eliminate the need for auditor judgement.
1. True
2. False
The type of audit evidence known as documentation involves the auditor’s examination of tangible assets with results of the examination being recorded, or “documented,” in the auditor’s work papers.
1. True
2. False
If a company’s cash ratio is greater than 1.0, the company is considered to have excellent short -term debt-paying ability.
1. True
2. False
The inventory turnover ration is a useful measure of a company’s short-term liquidity.
1. True
2. False
A company’s debt-to-equity ratio that is too low normally indicates the company has used up its borrowing capacity.
1. True
2. False
Earnings per share and the efficiency ratio are two examples of “operating and performance” ratios
1. True
2. False
If the return (before taxes) on common equity ratio is too low, investors (owners) might perceive that they should convert the company’s assets
1. True
2. False

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