Which of the Following Factors Would Most Likely Heighten an Auditor's

question 8

Multiple Choice

Which of the following factors would most likely heighten an auditor's concern about the risk of fraudulent financial reporting?

• A) Inability to generate cash flows from operations while reporting substantial earnings growth.
• B) Management's lack of interest in increasing the entity's earnings trend.
• C) Large amounts of liquid assets that are easily converted into cash.
• D) Inability to borrow necessary capital without granting debt covenants.

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Definitions:

Corpus Albicans

Atrophied corpus luteum, leaving a connective tissue scar in the ovary.

Secondary Follicles

The stage in the development of ovarian follicles where they begin to accumulate fluid and grow larger, preceding ovulation.

Menarche

Establishment of menstrual function; the time of the first menstrual period or flow.

Menstrual Bleeding

The monthly shedding of the lining of the uterus (endometrium) when pregnancy does not occur, resulting in bleeding from the vagina.