Listing All Bank Transfers Made a Few Days Before and After

question 139

Multiple Choice

Listing all bank transfers made a few days before and after the balance sheet date and tracing each to the accounting records for proper recording is a useful approach to test for

• A) kiting.
• B) lapping.
• C) income smoothing.
• D) channel stuffing.

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Definitions:

Common Size Financial Statements

Financial statements that present all line items as percentages of a common base figure rather than as absolute numerical figures, facilitating comparison.

Inventory Valuation Methods

Inventory Valuation Methods are accounting processes used to determine the cost of goods sold and the inventory value at the end of an accounting period.

FIFO vs. LIFO

A comparison between two inventory valuation methods: First-In, First-Out (FIFO), where goods first bought are the first to be sold, and Last-In, First-Out (LIFO), where goods most recently bought are the first to be sold.

P/E Ratios

The price-to-earnings ratio, a valuation metric for stocks calculated by dividing the current market price of a stock by its earnings per share.