As part of audit planning,you have calculated accounts receivable turnover for the last five years and compared it to industry averages.Your client's accounts receivable has decreased by about 1.25 times in the current year,while the industry rate has improved.One possible cause of this lowered accounts receivable turnover is
A)higher cost of goods sold.
B)increased bad debt expenses.
C)fictitious revenue.
D)fictitious expenses.

Question

Quizplus · Accepted Answer

Fictitious revenue can lead to an overstatement of accounts receivable, which would result in a lower accounts receivable turnover ratio.

As Part of Audit Planning,you Have Calculated Accounts Receivable Turnover