Fraud Related to Revenue Recognition Will Most Likely Be Identified

question 94

Multiple Choice

Fraud related to revenue recognition will most likely be identified by the auditor through which of the following independent situations?

• A) Sales have increased 5% in the current period over the previous period and is consistent with the results of competitors.
• B) Gross margin is equivalent in the current period to previous periods and is below that of the industry.
• C) Sales are higher in the month preceding each quarter end.
• D) The sales of a revolutionary new product are increasing beyond that of the competition in the periods immediately following its introduction.

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Definitions:

Physical Reactions

Bodily responses to stimuli, including reflexes, movements, and physiological changes, often automatic and involuntary.

Blocked

Prevented from progressing or moving forward, often referring to an impediment in a process or pathway.

Thwarted

Refers to being prevented from accomplishing something or obstructed in achieving an objective.

Goal

An aim or desired outcome that a person or a group of people envision, plan, and commit to achieve.