When scrutinizing a statement of cash flows in an attempt to gain a better understanding of the client, which would be most surprising to an auditor?
A)An increase in accounts receivable
B)A decrease in payables
C)Negative investing cash flows
D)Negative operating cash flows

Question

Quizplus · Accepted Answer

Negative operating cash flows would be the most surprising to an auditor as they suggest the company is experiencing significant cash flow problems from their regular operations, which could lead to financial distress or bankruptcies. Increases in accounts receivable and decreases in payables can be expected in certain situations, and negative investing cash flows may be due to planned capital expenditures.

When Scrutinizing a Statement of Cash Flows in an Attempt