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CMA Intermediate · Corporate Accounting and Auditing · Audit Sampling, Audit Techniques and Analytical Procedure

According to SA 520, substantive analytical procedures are generally most applicable to which of the following?

Substantive analytical procedures are generally more applicable to large volumes of transactions that tend to be predictable over time. They rest on the expectation that relationships among data exist and continue, which is unlikely for one-off or unpredictable items.

  1. ALarge volumes of transactions that tend to be predictable over timeCorrect
  2. BUnusual one-off transactions entered into near the year-end
  3. CJudgemental estimates with no historical pattern
  4. DTransactions where no relationship among data is expected to exist

Explanation

SA 520 says substantive analytical procedures are generally more applicable to large volumes of transactions that tend to be predictable over time. This is because planned procedures rely on the expectation that relationships among data exist and continue. One-off or unpredictable items lack such stable relationships, so the other options are weaker.

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