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CTP · Question #495
CTP Question #495: Real Exam Question with Answer & Explanation
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Question
- (Topic 5) LST Company is a publicly traded company with $120 million in sales. Historically, LST does not extend credit to customers beyond net 45 terms. To help promote sale of a new product introduced into the market this year, LST offered financing terms to customers purchasing the new product. As a result, sales increased by 15% from the prior year and accounts receivable increased by 5%. At the end of their fiscal year LST had a $15 million sale to a new customer that was recorded as a note receivable. LST recognizes revenue when goods leave the facility. During the financial audit the auditors discovered that the customer did not receive the product until three days after the year-end. Under GAAP accounting, the auditors would MOST LIKELY render a(n):
Options
- Aadverse opinion because the product not received before the fiscal year-end.
- Bqualified opinion because the product was not received before the fiscal year-end.
- Cunqualified opinion because the product was shipped before the fiscal year-end.
- Ddisclaimed opinion because the product was shipped before the fiscal year-end.
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