An auditor performs analytical procedures that involve comparing the gross margins of various divisional operations with those of other divisions and with the individual division's performance in previous years. The auditor notes a significant decrease in the gross margin at one division. The auditor does some preliminary investigation and also notes that there were no changes in products, production methods, or divisional management during the year. Based on the above information, the most likely cause of the increase in gross margin would be:

multiple choice

Multiple Choice

• An understatement of year-end inventory.

• An increase in the number of suppliers of the material used in manufacturing the product.

• A decrease in the number of competitors selling similar products.

• An understatement of year-end accounts receivable.