Which of the following characteristics most likely would heighten an auditor’s concern about the risk of material misstatements in an entity’s financial statements?

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Here is the solution for Which of the following characteristics most likely would heighten an auditor’s concern about the risk of material misstatements in an entity’s financial statements?. The solution is given after the options.

Which of the following characteristics most likely would heighten an auditor’s concern about the risk of material misstatements in an entity’s financial statements?

The entity’s industry is experiencing declining customer demand.

Employees who handle cash receipts are not bonded.

Bank reconciliations usually include in-transit deposits.

Equipment is often sold at a loss before being fully depreciated.

Correct Answer

The entity’s industry is experiencing declining customer demand.

Explanation:

The entity’s industry is experiencing declining customer demand. is the answer for Which of the following characteristics most likely would heighten an auditor’s concern about the risk of material misstatements in an entity’s financial statements?

Conclusion:

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