$16-20(Objective16-2)$ The following questions concern analytical procedures $in$ the sales and collection cycle. Choose the best response.

$As$ a result $of$ analytical procedures, the auditor determines that the gross profit percentage has declined from $30$ percent $in$ the preceding year $to20$ percent $in$ the current year. The auditor should

express a qualified opinion due $to$ inability $of$ the client company $to$ continue $as$ a going concern.

evaluate management$s$ performance $in$ causing this decline.

require footnote disclosure.

consider the possibility $of$ a misstatement $in$ the financial statements.

$An$ auditor$s$ preliminary analysis $of$ accounts receivable turnover revealed the following rates over these accounting periods:

$202320222021$

$4\mathrm{.}36\mathrm{.}27\mathrm{.}3$

Which $of$ the following $is$ the most likely cause $of$ the decrease $in$ accounts receivable turnover?

Increase $in$ the cash discount offered

Liberalization $of$ credit policy

Shortening $of$ due date terms

Increased cash sales

After a CPA has determined that accounts receivable have increased $as$ a result $of$ slow collections $inatight$ money$$ environment, the CPA will $be$ likely $to$

expand tests $of$ collectibility.

review the going concern ramifications.

review the credit and collection policy.

increase the balance $in$ the allowance for bad debt account.