An auditor noted that client sales increased ten percent for the year. At the same time cost of goods sold as a percent of sales decreased from 45% to 40% and year end accounts receivable had increased by 8%. The auditor is most likely concerned about: unrecorded costs Improper credit approvals fictitious sales improper cot-off.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
Question 33
An auditor noted that client sales increased ten percent for the year. At the same time cost of goods sold as a percent of sales decreased from 45% to 40% and year end
The auditor is most likely concerned about:
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unrecorded costs |
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Improper credit approvals |
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fictitious sales |
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improper cot-off. |
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