Items 1 Through 6 Represent an Auditor's Observed Changes in Certain

Essay

Items 1 through 6 represent an auditor's observed changes in certain financial statement ratios or amounts from the prior year's ratios or amounts. For each observed change, select the most likely explanation or explanations from the list of explanations provided. Answers on the list may be selected once, more than once, or not at all.Auditor's observed changes (considered independent of each other).Inventory turnover increased substantially from the prior year. (Select 3 explanations)Accounts receivable turnover decreased substantially from the prior year. (Select 3 explanations)Allowance for doubtful accounts increased from the prior year, but allowance for doubtful accounts as a percentage of accounts receivable decreased from the prior year. (Select 3 explanations)Long term debt increased from the prior year, but interest expense increased a larger than proportionate amount than long term debt. (Select 1 explanation)Operating income increased from the prior year although the entity was less profitable than in the prior year. (Select 2 explanations)Gross margin percentage was unchanged from the prior year although gross margin increased from the prior year. (Select 1 explanation)