[OneStepAwayCPA]

If accounts receivable turned over 7.1 times in 20X0 as compared to only 5.6 times in 20X1, it is possible that there were

A. Unrecorded credit sales in 20X1.

B. Unrecorded cash receipts in 20X0.

C. More thorough credit investigations made by the company late in 20X0.

D. Fictitious cash sales in 20X1.

The answer is C. I thought it would be A. Anyone explain this to me? thanks.

[killaking]

I kinda dont know why C is right but the others I can explain

A. both sales and AR will be understated that will increase the ratio

B this one I dont really know why because AR would be overstated

D sales will be overstated since it said cash it wont hit AR this will increase the ratio

FAR: 7/17/10 missed exam FML reschedule 8/29/10-77 EPIC!
REG: 5/31/11-73 SMH, 8/31/11-85
BEC: 4/15/10-72 : retake 10/3/10-80
AUD: 11/28/10-74, 02/27/11-71 FML, 8/1/11-80
Ethics 10/22/22-80, retake 11/28/11 - 88

[rknight21]

i remember this question from my studies… the reasoning is the ratio in 2001 is lower as a result of changes made in 2000. a more thorough credit check would mean that avg. accounts recd is higher since less bad debt is incurred.

[killaking]

yea where did you get this question becker doesnt do a good job with ratios

FAR: 7/17/10 missed exam FML reschedule 8/29/10-77 EPIC!
REG: 5/31/11-73 SMH, 8/31/11-85
BEC: 4/15/10-72 : retake 10/3/10-80
AUD: 11/28/10-74, 02/27/11-71 FML, 8/1/11-80
Ethics 10/22/22-80, retake 11/28/11 - 88

[OneStepAwayCPA]

wiley test bank #EVID-0076.

choice C makes sense with knights explaination

now why choice B is not an answer, hmm…

[Author]

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