An unusual growth in the number of days' sales in receivables can be a red flag for which of the following financial statement fraud schemes?
A) Timing differences
B) Fictitious revenues
C) Improper asset valuation
D) All of the above

Question

Quizplus · Accepted Answer

An unusual growth in the number of days' sales in receivables can indicate timing differences (where revenues are recognized too early), fictitious revenues (where sales that never occurred are recorded), and improper asset valuation (where receivables are overstated). All these schemes involve manipulating financial statements to present a more favorable but inaccurate picture of the company's financial health.

An Unusual Growth in the Number of Days' Sales in Receivables