Unformatted text preview: d. Forensic accountants look for small errors and irregularities. e. None of the above is false. 83. Which statement is generally false? a. Neither inventory nor accounts receivable should grow faster than sales. b. The trend in operating income is as important as the trend in earnings. c. If net income is moving up while cash flow from operations is drifting downward, something may be wrong. d. Horizontal analysis is commonly used with the Statement of Cash Flow. e. None of the above is false. 84. Which scheme does not inflate sales? a. Recognizing sales on disputed claims against customers. b. Recognizing sales without shipping the goods. c. Understanding allowances for sales discounts. d. Recognizing full sales amount for partial shipments. e. All inflate sales. 85. Which statement is false? a. WorldCom reversed a cookie jar of reserves to increase income. b. Xerox increased its earnings by placing into income so‐called cushion reserves. c. Enron had more than 2,500 special purpose entities. d. Making write‐offs directly against earnings is called the big bath. e. None of the above is false. 86. Which statement is false? a. Analytics can lie. b. Vertical analysis can be used for all basic financial statements. c. Horizontal analysis is often referred to as common‐sized statements. d. When deferred revenues (on the balance sheet) rise sharply, a company may be having trouble delivering its products as promised. e. None of the above. 87. Which would not be considered an analytical procedure? a. Comparison with other operating information. b. Vertical analysis. c. Variance analysis. d. Ratio analysis. e. All of above are analytical procedures. 88. Given these facts, compute inventory turnover: Page 20 of 44 ...
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- Summer '10
- d. Horizontal analysis, sales discounts. d., c. Understanding allowances, reserves. c. Enron, Cash Flow. e., c. Horizontal analysis