ACC/291T: Principles Of Accounting

Why are receivables and revenue ripe areas for abuse or outright fraud?

A: SEC rules have been adjusted in recent years to make it easier to hide revenue from credit sales.

B: Income tax rules have been adjusted in recent years to make it easier to hide revenue from credit sales.

C: Generally accepted auditing standards do not allow auditors to scrutinize the detailed records of credit sales.

D: No real event, such as the receipt of cash, is necessary to record a debit to Accounts Receivable and a credit to Revenue.