9

reported revenue is most likely to have been reduced by management's discretionary estimate of:

A. warranty provisions

B. inventory damage and theft

C. interest to be earned on credit sales

10

Zimt AG reports 2007 revenue of L14.3 billion. During 2007, its accounts receivable rose by L0.7 billion, accounts payable

increased by L1.1 billion, and unearned revenue increased by L0.5 billion. Its cash collections from custormers in 2007 were

closest to:

A. L14.1billion

B. L14.58 billion

C. L15.2 billion

11

Cinamon Corp began the year with $12 million in accounts receivable and $31 million in deferred revenue. It ended the year with $15

million in accounts receivable and $27 million included in total revenue wre closest to:

A. $1 million

B. $7 million

C. $12 million

12

Which of the following is least liklely to be likely to be a warning sign of low -qualify revenue?

A. large decrease in deferred revenue

B. large increase in accounts receivable

C. A large increase in the allowance for doubtful accounts

13

An unexpectedly large reduction in the unearning revenue account is most likely a sign that the company:

A. accelerated revenue recognition

B. Overstated revenue in prior periods

C. Adopted more conservative revenue recognition practices

14

Canelle SA reported 2007 revenue of L137 million. In accounts receivable balance began the year at L11 million and

ended the year at L16 million. At year end, L2 million of receivables had been securitized. Canelle's cash collections

from customers(in L millions) in 2007 were closest to:

A. L130

B. L132

C. L134

15

In order to identify possible understatement of expense with regard to noncurrent assets, ananalyst would most

likey beware management's discretion to:

A. Accelerate depreciation

B. Increase the residual value

C. Reduce the expected useful like

16

A sudden rise in inventory balances is likely to warning sign of:

A. Understated expenses

B. Accelerated revenue recognition

C. ineffient working capital management

17

A warning sign that a company may deferring expenses is sales revenue growing at a shower rate that:

A. Unearned revenue

B. noncurrent liabilities

C. property, plant and equipment

18

An asset write- downis least likely to indicate understastement of expenses in:

A. Prior years

B. Future years

C. The current year