Debbie and Steve Are Discussing a Lecture Given by Their

question 37

Multiple Choice

Debbie and Steve are discussing a lecture given by their ethics professor after class one day. The professor said that misstatements of earnings are always unethical. Debbie agrees with this situation, but Steve does not. What statement might Steve make to best support his point of view?

• A) It depends on whether the misstatements were made deliberately
• B) It depends on whether a user relied on the financial statements
• C) It depends on whether the statements lead to a modified or unmodified opinion
• D) All are valid statements for Steve to support his point of view

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Definitions:

Average Collection Period

The average number of days it takes for a business to receive payments from its customers for invoices issued, indicative of the effectiveness of a company's credit and collection policies.

Net Sales

The amount of sales generated by a company after deductions for returns, allowances for damaged or missing goods, and discounts.

Accounts Receivable

Amounts owed to a business by its customers for goods or services that have been delivered but not yet paid for.

Receivables Turnover Ratio

A financial metric that measures how efficiently a company collects cash from credit customers.