Author Question: ________ of indirect proof is generally limited to retail establishments rather than illegal ... (Read 161 times)

chads108 · **on:** Jul 6, 2018

________ of indirect proof is generally limited to retail establishments rather than illegal businesses.

A) Cash method
B) Gross margin method
C) Expenditures method
D) Bank deposits method

Question 2

What types of information may be missing or hard to find in the financial statements?

What will be an ideal response?

vkodali · **Reply #1 on:** Jul 6, 2018

Answer to Question 1

B
Explanation: B) Gross margin method of indirect proof is generally limited to retail establishments rather than illegal businesses.

Answer to Question 2

Missing and hard to find information includes such intangibles as employee relations with management, the morale and efficiency of employees, the reputation of the firm with its customers, the firm's prestige in the community, the effectiveness of management, provisions for management succession, and potential exposure to changes in regulationssuch as environmental or food and drug enforcement. Much information is available in the notes to the financial statements, but may be difficult for the user to find and analyze. Complicated financing schemes, while revealed in the notes, may be impossible for many users to understand without an extensive background in accounting.