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:

Psychological Adaptation

The process by which individuals adjust their behavior, thoughts, or emotions to cope with changes in their environment or internal states.

Nonshared Environments

Refers to the unique factors and experiences that individuals have which differentiate them from others in their genetic family, contributing to differences in personality, preferences, and behavior.

Self-concept

An individual’s perception of self, encompassing beliefs, feelings, and thoughts about one’s identity and abilities.

Family Structure

The legal and genetic relationships among relatives living in the same home. Possible structures include nuclear family, extended family, stepfamily, single-parent family, and many others.