Question

An auditor discovered that a client's accounts receivable turnover is substantially lower for the current year than for the prior year. This may indicate that
A. Obsolete inventory has not yet been reduced to fair market value.
B. There was an improper cutoff of sales at the end of the year.
C. An unusually large receivable was written off near the end of the year.
D. The aging of accounts receivable was improperly performed in both years.

Answer 1

Answer:

B. There was an improper cutoff of sales at the end of the year.

Explanation:

Sales cuttoff focuses on whether sales are properly reccorded for a particular period.