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Early in your first audit of Star Corporation, you notice that sales and year end inventory are almost unchanged from the prior year. However, cost

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Early in your first audit of Star Corporation, you notice that sales and year end inventory are almost unchanged from the prior year. However, cost of goods sold is less than the previous year and accounts payable are down substantially. Gross profit has increased, but this increase has not carried hrough to net income as executive salaries have increased significantly. Management informs you that sales prices and purchase prices have not changed during the past year and that there have not been any new product Star relies on the periodic inventory method. Your initial impression is that internal controls may have several weaknesses. Suggest a possible explanation for the trends described, especially the decrease in Accounts Payable while sales and inventory were constant and gross profit increased. Explain fully the relationships involved

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