According to the SEC, [A]s part of the cover up, Peregrine personnel wrote off millions of dollars in uncollectibleprimarily shamreceivables, to acquisition-related accounts (LR 18205A).

1. Explain how this would affect the signal of CFFO lagging, or falling behind, operating income that would normally indicate an overstatement of revenue.

2. Explain how the improper write-off of accounts receivable as acquisition costs would affect the signal of accounts receivable increasing as a percentage of sales.