In an Audit of Financial Statements,risks Related to a High

question 53

Multiple Choice

In an audit of financial statements,risks related to a high rate of return of products sold include which of the following?

• A)Sales that are recorded improperly.
• B)An estimate of accrued returns that reduces net income.
• C)A reduction of net sales for an increase to the sales returns and allowance account.
• D)Consignment goods that are returned and forwarded to third parties.

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Definitions:

Nominal Exchange Rate

The rate at which one currency can be exchanged for another without adjusting for inflation.

Prices

The amount of money required to purchase a good or service.

Arbitrage

The simultaneous purchase and sale of the same asset in different markets to profit from tiny differences in the asset's listed price.

Shrimp

A small, decapod crustacean found in marine and freshwater environments, often consumed as seafood.