Required information Potential Misstatements in the Revenue Cycle Read the overview below and complete the activities that follow. The revenue cycle is a major cycle for most companies. Accounts receivable, revenue, and other accounts are tested through this cycle. Often there are misstatements found, including errors and/or fraud by the client. CONCEPT REVIEW: It is important in testing any cycle, especially revenue, to realize that misstatements will occur and to try to distinguish between errors and fraud. \begin{tabular}{|l|l|l|} \hline 1. & Many instances of misstatement are based on the inappropriate recognition of & errors \\ \hline 2. & One way to avoid misstatement of revenue is to ensure the client has proper & controls \\ \hline 3. & \begin{tabular}{l} Revenues are deemed to be earned when the company has __ what it must do to fulfill its \\ obligation. \end{tabular} & misstatement \\ \hline 4. & Side _ can substantially alter the terms of a sale. & risk \\ \hline 5. & & reeds to be assured in order to recognize revenue. \\ \hline \end{tabular}