A Test for Revenue Is

question 2

Multiple Choice

A test for revenue is:

• A) analyzing the gross margin for the current and prior periods.
• B) analyzing the changes in inventory, accounts receivable, and cash for any indication that their trend differs from that implied by the change in sales year over year.
• C) analyzing sales returns and allowances for proper disclosure.
• D) Both a and c.

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Definitions:

Pro Forma Statements

Financial statements that project a company's financial performance in the future, based on certain assumptions and adding or excluding non-recurring items.

Anticipated Rate of Growth

The expected annual increase in a company's revenue or profit, often expressed as a percentage.

Financial Leverage

The use of borrowed funds with a fixed cost to finance the assets of the business to increase the potential return to shareholders.

Planned Activities

Scheduled actions or tasks outlined by an organization or individual aimed at achieving specific goals.