This Question Tests Your Ability to Perceive the Place(s)where Potential

question 18

Essay

This question tests your ability to perceive the place(s)where potential problems may exist and the type of problem (overstatement or understatement)that may exist.
Required: For each of the items below,identify the account(s)that need(s)to be audited carefully and the reason;for example,"potential overstatement or understatement of _______."
A)Current year accounts receivable is larger than last year but the allowance for doubtful accounts is the same.
B)Current year inventory is larger than last year but the current year gross margin (profit)is larger.
C)Current year long-term liabilities are larger than last year but the interest expense is the same.
D)Current-year fixed assets total is larger than last year but current amortization expense is the same as last year.

• A)Current year accounts receivable is larger than last year but the allowance for doubtful accounts is the same.
• B)Current year inventory is larger than last year but the current year gross margin (profit)is larger.
• C)Current year long-term liabilities are larger than last year but the interest expense is the same.
• D)Current-year fixed assets total is larger than last year but current amortization expense is the same as last year.

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Definitions:

Behavioral Symptoms

Observable actions or reactions of a person, often associated with a particular condition or disorder, that may impact their functioning.

Single-parent Households

Homes where a child or children are raised by only one parent due to various circumstances.

Older Foster Children

Describes children in the foster care system who are typically older and may face challenges in being adopted due to their age.

Attachment Issues

Emotional and behavioral problems arising from difficulties in forming secure and healthy relationships during early childhood.