Q. Which of the following is an indication that a company may be recognizing revenue prematurely? Relative to its competitors, the company’s:
- asset turnover is decreasing.
- receivables turnover is increasing.
- days sales outstanding is increasing.
Solution
C is correct. If a company’s days sales outstanding (DSO) is increasing relative to competitors, this may be a signal that revenues are being recorded prematurely or are even fictitious. There are numerous analytical procedures that can be performed to provide evidence of manipulation of information in financial reporting. These warning signs are often linked to bias associated with revenue recognition and expense recognition policies.
过早确认，那就是Sales过高，那C不就是下降吗？
谢谢老师
