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question a company reported 2009 total revenue of 200 million and 2009net income of 4276354

Question

A company reported 2009 total revenue of $200 million and 2009net income of $150,000. The company's operating results wereimpacted by a slowing economy and the release of a competingproduct from its main rival that significantly reduced the demandfor its products. After the 12/31/2009 inventory count, theinventory manager suggested an impairment write down of $1 million.The CFO instructed the controller to record the write down in thefirst quarter of 2010.

Which of the following is true?

Select one:

a. There is minimal risk of fraud because there is still somedemand for the company's products.

b. There is minimal risk of fraud because the company recordedthe write down suggested by the inventory manager.

c. There is minimal risk of fraud because the $1 million writedown is only 4/10 of 1% of revenue and is therefore notmaterial.

d. There is a risk of fraud because net income was only $150,000and the write down was recorded in the next fiscal year.

e. There is a risk of fraud because you would expect higher netincome from a company with total revenue of $200 million.

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