An Auditor Has Determined That a Client's 'Days in Receivables

question 84

Multiple Choice

An auditor has determined that a client's 'days in receivables' ratio has slowly increased over the last three years.Which of the following could be a possible reason for this?

• A)The client has hired a collection agency which is extremely efficient at collecting.
• B)The receivables have been secured as collateral for a recent capital asset purchase.
• C)The accounts receivable department has implemented a new IT system, making collections much quicker and more efficient.
• D)The accounts receivable turnover ratio has decreased due to poor internal controls related to credit granting procedures.

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