As Part of Audit Planning,you Have Calculated Accounts Receivable Turnover

question 73

Multiple Choice

As part of audit planning,you have calculated accounts receivable turnover for the last five years and compared it to industry averages.Your client's accounts receivable has decreased by about 1.25 times in the current year,while the industry rate has improved.One possible cause of this lowered accounts receivable turnover is

• A)higher cost of goods sold.
• B)increased bad debt expenses.
• C)fictitious revenue.
• D)fictitious expenses.

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Definitions:

Direct Labor-Hours

Direct labor-hours refer to the total hours worked by employees directly involved in the production process, used as a basis for allocating labor costs to products.

Machine-Hours

The total hours that machinery is operated during a specific period for production purposes.

Departmental Predetermined Overhead Rates

These rates are calculated to allocate manufacturing overhead costs to specific departments, based on estimated or actual overhead and activity levels.

Machine-Hours

A measure of production time using machinery; used as a basis for allocating manufacturing overhead costs to products.