When Scrutinizing a Statement of Cash Flows in an Attempt

question 52

Multiple Choice

When scrutinizing a statement of cash flows in an attempt to gain a better understanding of the client, which would be most surprising to an auditor?

• A)An increase in accounts receivable
• B)A decrease in payables
• C)Negative investing cash flows
• D)Negative operating cash flows

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Definitions:

Monopolistic Firms

Companies that have significant control over the market for a particular good or service, allowing them to influence price and production levels.

Economic Inefficiency

A situation where resources are not used in the most productive way, often leading to waste or a loss of potential output.

Minimum Average Total Cost

The lowest point on the average total cost curve, where a firm is most efficiently combining resources to produce goods or services.

Marginal Cost

The extra expense associated with the production of an additional single unit of a product or service.