Which of the following statements is correct about accounting for expected sales returns? 33 Multiple Choice Skipped Since no inventory has yet been received, a liability, Inventory-Estimated Returns, is credited for the cost of the expected returned items. Expected returns are disclosed in the notes to the financial statements, but journal entries are not required. Since no cash has yet been paid, a liability, Refund Liability, is credited for the sales price of expected returns. Sales Revenue will be debited and Cost of Goods Sold will be credited for the sales price of expected returns. O Which of the following statements concerning financial reporting is correct? 34 Multiple Choice Skipped The Sarbanes-Oxley Act does not require businesses to maintain an audited system of internal control. There is no attempt to eliminate the difference in accounting rules in the U.S. and elsewhere as this would prevent investors from comparing financial statements of companies from different countries. A fundamental characteristic of useful financial information is that it fully depicts the economic substance of business activities. The FASB requires all financial decision makers to adhere to a code of professional conduct. Vertical analysis: 35 Multiple Choice Skipped identifies the relative contribution made by each financial statement line item. involves comparing amounts across different financial statements. provides an understanding of the relationships among various items on financial statements by expressing the differences in terms of dollars O identifies trends over time