Anna performed a trend analysis of accounts receivable (AR)balances and computed the days to collect AR ratio.When she compared the results of her analysis with industry averages,she found the results were unusually low compared to the industry norm.Anna can conclude that
A)the accounts receivable balance is wrong.
B)the accounts receivable has an increased risk of misstatement.
C)the integrity of the company's management is questionable.
D)she will not be able to rely on internal controls for accounts receivable for audit purposes.

Question

Quizplus · Accepted Answer

Anna's finding of unusually low days to collect AR ratio compared to industry averages suggests an increased risk of misstatement in the accounts receivable balances. This finding may require further investigation and testing to ensure the accuracy and completeness of the financial statements. However, it does not necessarily indicate that the accounts receivable balance is wrong or that the integrity of the company's management is questionable. More information is needed to make those conclusions. It also does not automatically mean that Anna cannot rely on internal controls for audit purposes, as the effectiveness of internal controls needs to be assessed separately.

Anna Performed a Trend Analysis of Accounts Receivable (AR)balances and Computed