Q13. Frank Brill, CFA, is concerned that Moses Aviation is overstating its profits. The best indicator of such action would be Moses
Aviation’s:
A) sales-growth rate of nearly twice the industry average.
B) recognition of revenue from barter transactions.
C) rising inventory.
Q14. With regards to specific measures to analyze in detecting manipulation in the financial reporting process, which of the following
statements is the least accurate?
A) A decreasing days’ sales outstanding (DSO) measure may be an indication of lower quality revenue.
B) An increasing days’ inventory on hand (DOH) measure may be indicative of obsolete inventory.
C) Negative nonrecurring or non-operating items may be indicative of misclassifying an operating expense.
Q15. Marcel Schulte is analyzing various retailing firms. Which of the following items is least indicative of a potential problem with
revenue recognition and earnings quality?
A) Use of barter transactions.
B) Disproportionate revenues in the last quarter of the calendar year.
C) Implementing a “bill and hold” arrangement.
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