Question

Auditors try to identify predictable relationships when using analytical procedures. relationships involving transactions from which of the following accounts most likely would yield the highest level of evidence?

O payroll expense.
O accounts receivable.
O advertising expense.
O accounts payable.

Answer 1

When auditors perform analytical procedures, payroll expenses tend to offer the highest level of evidence due to their consistent transaction patterns. This can make it easier to spot anomalies compared to other accounts with less predictable transactions.

Step-by-step explanation:

Auditors use analytical procedures to identify predictable relationships that can provide evidence regarding the accuracy of financial statements. When evaluating accounts with predictable and consistent transactions, payroll expense is most likely to yield a high level of evidence. This is because payroll transactions are generally regular and recurrent, making anomalies easier to spot. On the contrary, accounts like advertising expense may have less predictable patterns and thus provide less reliable evidence.

Similarly, for accounts such as accounts receivable and accounts payable, the level of evidence may vary depending on the regularity and documentation of the transactions involved, though they often have more variation than payroll due to the nature of business dealings.

In conclusion, predictable relationships in payroll expenses tend to provide auditors with the highest level of evidence during analytical procedures because they are based on consistent and regular transaction patterns compared to other accounts.