Which of These Would Not Necessarily Be Considered to Be

question 37

Multiple Choice

Which of these would not necessarily be considered to be a risk factor for potential misstatements?

• A) there is intense price competition in the industry of operation.
• B) profit margin has increased and inventory turnover days has decreased
• C) an employee in the cash office was passed over for a promotion.
• D) segregation of duties is not practiced.

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Definitions:

Allowance for Doubtful Accounts

A contra-asset account that represents the estimated portion of accounts receivable that may not be collectible.

Bad Debts Expense

The amount of receivables that a company does not expect to collect and thus writes off as a loss in its accounting records.

Accounts Receivable Turnover

A financial ratio indicating how many times a company's accounts receivable are collected during a specific period.

Comparative Balance Sheets

Financial statements that present the financial position of a company at different points in time, side by side, to facilitate comparison.