Chapter 6, Problem 54RSCQ

Indicate how the auditor could use substantive analytical procedures in resting the following accounts:

a. Interest expense related to bonds outstanding.
b. Natural gas expense for a public utility company.
c. Supplies expense for a factory.
d. Cost of goods sold for a fast-food franchisor (e.g., Wendy’s or McDonald’s). Note that cost of goods sold tends to average about 35% of sales in fast-food franchises.
e. Salary expense for an office (region) of a professional services firm.