The Auditor Learns That Collections of Accounts Receivable During the First

question 5

Multiple Choice

The auditor learns that collections of accounts receivable during the first ten days of January were entered as debits to cash and credits to accounts receivable as of December 31.The effect generally will be to:

• A) overstate working capital with no effect on the current ratio at December 31.
• B) overstate the current ratio with no effect on working capital at December 31.
• C) overstate both working capital and the current ratio at December 31.
• D) leave both working capital and the current ratio unchanged at December 31.

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Definitions:

Hepatic Portal System

System of portal veins that carries blood from the intestines, stomach, spleen, and pancreas to the liver.

Gastric Vein

A vein draining blood from the stomach into the portal vein system.

Inferior Mesenteric Vein

A vein draining blood from the lower part of the large intestine into the portal venous system.

Auscultatory Method

A technique for measuring blood pressure using a stethoscope and sphygmomanometer to listen to the Korotkoff sounds in an artery.