Management and the Auditor Have to Be Alert to the Risk

question 121

Multiple Choice

Management and the auditor have to be alert to the risk of collusion with _______.

• A)vendors and vendor kickbacks to employees
• B)customers and vendor kickbacks to employees
• C)customers and customer kickbacks to employees
• D)vendors and vendor kickbacks to stockholders

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Definitions:

Days Sales Outstanding

A calculation used by a company to estimate the average number of days it takes to collect payments after a sale has been made.

Receivables

Funds that are owed to a company by its customers as a result of the sale of goods or services on credit.

Sales

The total amount of goods or services sold by a business, contributing to its revenue.

Average Payables Period

A financial metric that calculates the average number of days it takes a company to pay its vendors and suppliers.