Which ONE of the following relationships/ratios are reasons why analytical procedures can NOT give strong evidence in relation to the accuracy of purchases?
Select ONE answer:
- Purchases and payables
- Purchases and inventories
- Gross margin
- Operating margin
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 4
- Not correct
- Not correct
- Not correct
- Correct – Applying analytical procedures to the operating margin which contains the effect of all expenses, not just purchases, will not provide direct evidence as to the accuracy of purchases.
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