Please help with second paragraph, second line: The decline in gross margin could be due to [A. A decrease in the cost of drugs.; B. An increase in the selling price of drugs.; C. An understatement of drug inventory, a theft of drug inventory, or understated sales.]

The explanation given by Adams is [A. correct in part, but appears to be overstated.]. The gross margin percentage for nondrugs [C. is approximately consistent.] For drugs, the percent [A. dropped significantly in current year, far more than industry declines.] The percent for drugs had [A. been extremely stable] before 2019. The change in the gross margin percent for drug in could be due to the fact that [B. James prices may have declined more than the industry due exceptional competition.]

As the auditor, you [B. cannot] accept ' explanation if the decline is material. **The decline in gross margin could be due to [A. A decrease in the cost of drugs.; B. An increase in the selling price of drugs.; C. An understatement of drug inventory, a theft of drug inventory, or understated sales.]** Further investigation B. Is required to determine if the decline is due to competitive factors or to a misstatement of income.]