Anna Performed a Trend Analysis of Accounts Receivable (AR)balances and Computed

question 13

Multiple Choice

Anna performed a trend analysis of accounts receivable (AR) balances and computed the days to collect AR ratio.When she compared the results of her analysis with industry averages,she found the results were unusually low compared to the industry norm.Anna can conclude that

• A)the accounts receivable balance is wrong.
• B)the accounts receivable has an increased risk of misstatement.
• C)the integrity of the company's management is questionable.
• D)she will not be able to rely on internal controls for accounts receivable for audit purposes.

Understand the purpose and process of adjusting entries in the accounting cycle.

Determine the correct adjusting entries for prepaid expenses, supplies, and accrued revenues.

Identify how adjusting entries affect financial statement accounts and financial statements.

Differentiate between types of accounts such as assets, liabilities, revenues, and expenses in the context of adjusting entries.

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Definitions:

Risk Taking

The act of engaging in behaviors or decisions that have the potential for negative consequences but are pursued for potential positive outcomes.

Need To Belong

An innate human desire to form and maintain strong, stable relationships with others.

Interpersonal Contact

Direct interaction between two or more individuals, involving communication or physical presence.

Relationships

Connections between individuals or groups characterized by emotional or social linkage, and interactions that can influence behavior and well-being.