CHAPTER 10 - CHAPTER 10 10-7

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CHAPTER 10 10-7 The analytical procedures that can be used to test revenue-related accounts and  the possible misstatements that can be detected by each analytical procedure are  (also see Table 10-9): Analytical Procedure Possible Misstatement Detected Revenue: Comparison of gross profit percentage by product line with previous years' and/or industry data. Comparison of reported revenue to budgeted revenue. Unrecorded (understated) revenue Fictitious (overstated) revenue Changes in pricing policies Product-pricing problems Accounts Receivable, Allowance for Uncollectible Accounts, and Bad-Debt Expense: Comparison of receivables turnover and days outstanding in accounts receivable to previous years' and/or industry data. Comparison of aging categories on aged trial balance of accounts receivable to previous years. Under- or overstatement of allowance for uncollectible accounts and bad-debt expense
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Comparison of bad-debt expense as a percentage of revenue to previous years' and/or industry data.
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CHAPTER 10 - CHAPTER 10 10-7

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