ABCDE Technologies, Inc., designs, manufactures, and markets an extensive line of PC cards. The company sells its PC cards primarily to original equipment manufacturers (OEMs) for industrial and commercial applications in a market with intense competition. In fact, many OEM companies ran into financial difficulty in 2008 because of fierce competition. The following tables are part of the company€™s financial statements for 20x1 and 20x2:

1. Determine the red flags that exist in these financial statements. Describe the scenarios that might contain these symptoms.
2. Based upon the red flags and scenarios you identified, determine what types of financial statement fraud the company may be involvedin.

ABCDE TECHNOLOGIES, INC., CONSOLIDATED BALANCE SHEET (PARTIAL)-UNAUDITED DECEMBER 31, 20XI DECEMBER 31, 20X2 Assets: Current Assets: Cash and cash S6,181,520 S 970446 equivalents Available-for- 4,932,763 sales securities Accounts receiv- 12,592,231 3,932170 able, net of allowance for doubtful accounts of $148,300 and $139,200 at December 31 20X1 and 20X1 respectively 18,229,317 18,229,317 8,609,492 Other current 8,609,492 assets Total current assets $60,165,148 $22,121,600 ABCDE TECHNOLOGIES, IN C., CONSOLID ATED INCOME STATEMENT (PARTIAL) YEAR ENDED DECEMBER 31-UNAUDITED 20X1 20X2 20X3 Sales $37,847,681 $12,445,015 $8,213,236 4,523,186 Cost of 15,895,741 6,832,927 goods sold Gross mi $21,951,940 $5,612,088 3,690,050