In your review of ABC Company's financials,you note that Receivables have increased approximately 200% from the previous year,while Cash has declined.Further investigation reveals that 70% of ABC's receivables were booked within 7 days of the end of the quarter.If financial statement fraud is involved,which type is most likely?
A)Fictitious revenues.
B)Timing differences.
C)Improper asset valuations.
D)Improper disclosures.

Question

Quizplus · Accepted Answer

Fictitious revenues are likely involved if a significant increase in receivables is observed, especially if a large portion of these receivables were booked just before the end of the quarter. This could indicate that sales were recorded without actual delivery of goods or services, inflating revenue figures.

In Your Review of ABC Company's Financials,you Note That Receivables