In an Audit of Financial Statements,the Risk of the High

question 88

Multiple Choice

In an audit of financial statements,the risk of the high rate of return of products sold includes that of

• 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:

Financial Statements

Formal records of the financial activities and condition of a business, person, or other entity, often including the balance sheet, income statement, and cash flow statement.

Potential Investors

Individuals or entities that have the capability to invest capital in a project or company but have not yet committed to the investment.