Which of the Following, When Discovered Through the Use of Analytical

question 31

Multiple Choice

Which of the following, when discovered through the use of analytical procedures, would indicate a relatively high risk of financial failure?

• A) an increase in the balance in fixed assets
• B) a decline in gross margin percentages
• C) an increase in the ratio of allowance for uncollectible accounts to gross accounts receivable, while at the same time accounts receivable turnover decreases
• D) a higher than normal ratio of long-term debt to net worth, as well as a lower than average ratio of profits to total assets

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Definitions:

Stock Ownership

Holding shares in a company, which represent a portion of the company's capital and give certain rights to the shareholder.

Voting Rights

The ability of shareholders to vote on corporate matters, such as the election of the board of directors.

Management Control

Refers to the processes, policies, and procedures that are put in place by an organization's management to ensure that its goals and objectives are achieved efficiently and effectively.

Unethical Behaviour

Actions or practices that breach moral or professional conduct codes.