Which of the Following May Suggest That a Financial Statements

question 29

Multiple Choice

Which of the following may suggest that a financial statements are unreliable?

• A) The reported profits are far less than the operating cash flow for the period.
• B) The income tax expense is low compared to profits and the balance sheet shows a significant deferral.
• C) Inventory valuation and revenue recognition has changed significantly.
• D) There is an increase in Notes to the financial statements.
• E) Modifications in general accounting policies are similar to those adopted by a large part of the industry.

---

Definitions:

High-top Shoes

Footwear that extends slightly over the wearer's ankle, often used for added support.

Cultural Groups

Refers to a collection of people who share common values, traditions, or behaviors based on ethnicity, religion, language, or national origin.

Solid Food

Food that has been pureed or is in firm pieces, introduced to infants typically around 6 months of age to complement breast milk or formula feeding.

Tooth Eruption

The process by which a tooth moves through the bone and gum tissue to enter the oral cavity.