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Regarding warranty reserves and their associated auditing issues, Multiple Choice The warranty reserve account can be manipulated to understate income during a good sales year.

Regarding warranty reserves and their associated auditing issues, Multiple Choice The warranty reserve account can be manipulated to understate income during a good sales year. A known decrease in product reliability, with all other factors remaining the same, should lead to a decrease in the warranty reserve account. A common fraud scheme known as 'channel stuffing' relies on manipulation of reserve accounts, sometimes including the warranty reserve account. An inherent risk of warranty reserves is the reliance on outside parties

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