question 1-

part 1-Fraudulent sales and accounts recelvables recorded at year-end (with no cost of goods sold entry) will:

Multiple Choice

a-Increase year-end recorded inventory.

b-Decrease recorded net income.

c-Decrease the current ratio.

d-Increase days of sales in accounts receivable.

part 2-The auditors of Smith Electronics wish to limit the audit risk of material misstatement In the test of accounts recelvable to 5 percent. They believe that

Inherent risk is 50%, and there is a 40% risk that material misstatement could have bypassed the client's system of Internal control. What is the maximum

detection risk the auditors should specify in their substantive procedures of detalls of accounts receivable?

Multiple Choice

a-25.0%.

b-60%.

c-12.5%.

d-20.0%.