Describe two types of substantive analytical procedures often performed in the audit of the sales and collection cycle and describe how they might indicate a possible misstatement in the financial statements.

Identify and select the two types of substantive analytical procedures and then choose the possible misstatement in the financial statements.

compare aging categories as a percentage of net income with previous years

compare bad debt expense as a percentage of net sales with precvious years

compare gross margin percentage with previous years by prodect line

compare individual customer balances with average customer balances

compare sales by month by product line over time

possible misstatments

A.	Misstatements in accounts receivable and related income statement accounts.
B.	Overstatement or understatement of allowance for uncollectible accounts and bad debt expense.
C.	Overstatement or understatement of allowance for uncollectible accounts and bad debt expense; also may indicate fictitious accounts receivable.
D.	Overstatement or understatement of sales and accounts receivable.
E.	Overstatement or understatement of sales returns and allowances and accounts receivable.
F.	Uncollectible accounts receivable that have not been provided for.