PA Is Auditing a Client Where the Accounts Receivable Are

question 9

Multiple Choice

PA is auditing a client where the accounts receivable are in worse shape than last year: many accounts are significantly overdue.How would this fact be dealt with in the audit risk model?

• A)increase inherent risk for accounts receivable
• B)decrease inherent risk for accounts receivable
• C)increase control risk for accounts receivable
• D)decrease control risk for accounts receivable

---

Definitions:

Capital To Labor Ratio

A measurement of the amount of capital employed per unit of labor, often used to understand the level of mechanization or technology used in production.

Capital Goods

Goods that are used in producing other goods, rather than being bought by consumers directly, such as machinery, tools, and buildings used in production.

Economic Growth

An increase in a nation's production of goods and services, measured by its gross domestic product (GDP) over time.

Consumer Goods

Items produced for personal consumption by individuals and households.