Multiple choice

Directions: Each of the next five items consists of two statements, one labelled as the 'Assertion' (A) and the other as 'Reason' (R). You are to examine these two statements carefully and select the answers to these items using the codes given below. Assertion (A)—Analytical review procedures are useful only at the time of planning of an audit. Reason (R)—Analytical reviews are the test of financial information conducted through a study and review of relationship among financial data.

  1. Both (A) and (R) are individually true and (R) is the correct explanation of (A).

  2. Both (A) and (R) are individually true but (R) is not the correct explanation of (A).

  3. (A) is true but (R) is false.

  4. (A) is false but (R) is true.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Assertion (A) is false because analytical review procedures are useful at multiple stages of an audit, including planning, substantive testing, and the overall review stage. Reason (R) is individually true as it correctly defines what analytical reviews entail.

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