Which of the following is a highly suspicious financial statement relationship?
A) Increased revenues with increased cash flows
B) Increased volume with decreased cost per unit
C) Increased inventory with decreased payables
D) Increased inventory with increased warehousing costs

Question

Quizplus · Accepted Answer

Increased inventory with decreased payables is highly suspicious because typically, if inventory increases, payables (amounts owed to suppliers) would also increase unless the company is paying off its suppliers faster than it is restocking, which could indicate issues like overstocking or financial misreporting.

Which of the Following Is a Highly Suspicious Financial Statement