Which of the following items should alert the analyst to the potential for manipulation when analyzing accounts receivable and the allowance for doubtful accounts?
a. Sales, accounts receivable and the allowance for doubtful accounts are all growing at approximately the same rate.
b. A company lowers its credit standards and also increases the balance in the allowance for doubtful accounts.
c. Accounts receivable is growing at a large rate and the allowance for doubtful accounts is decreasing.
d. An analysis of the Valuation and Qualifying Accounts schedule required in the Form 10-K reveals that the amounts recorded for bad debt expense are close in amount to the actual amounts written off each year.
Question 2
The bank statement will show
a. the beginning bank balance.
b. the balance on deposit at the end of the month.
c. any deductions from the bank statement balance.
d. the amounts of checks paid during the month.
e. all of these.
The WISC-IV: Sample Items
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