In an audit of financial statements,the risk of the high rate of return of products sold includes that of
A)sales that are recorded improperly.
B)an estimate of accrued returns that reduces net income.
C)a reduction of net sales for an increase to the sales returns and allowance account.
D)consignment goods that are returned and forwarded to third parties.

Question

Quizplus · Accepted Answer

The high rate of return of products sold indicates a possibility of products being returned by customers. This presents a risk of sales being recorded improperly, such as recording returned products as new sales, which can cause an overstatement of revenue and net income.

In an Audit of Financial Statements,the Risk of the High