Tutorial_8 - Tutorial 8 A: Multiple Choice Questions 1. As...

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Tutorial 8 A: Multiple Choice Questions 1. As a result of analytical procedures, the independent auditor determines that the gross profit has declined from 30% in the preceding year to 20% in the current year. The auditor should: (a) express a qualified opinion due to inability of the client company to continue as a going concern (b) evaluate management’s performance in causing this decline (c) require footnote disclosure (d) consider the possibility of an error in the financial statements 2. Once a public accountant has determined that accounts receivable have increased as a result of slow collections in a ‘tight money’ environment, the accountant would be likely to: (a) increase the balance in the provision for doubtful debts account (b) review the going concern ramifications (c) review the credit and collection policy (d) expand tests of collectibility 3. In connection with his review of key ratios, a public accountant notes that Pozitive Clothes had accounts receivable equal to 30 days’ sales at 30 June 20X4, and to 55 days’ sales at 30 June 20X5. Assuming there have been no changes in economic conditions, clientele or sales mix, this change most likely
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This note was uploaded on 07/31/2011 for the course MGMT 2027 taught by Professor Shak during the Three '07 term at Queensland.

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Tutorial_8 - Tutorial 8 A: Multiple Choice Questions 1. As...

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