Gloria CPA, an auditor for Smart Move Inc., observed changes in certain Year 2 financial ratios or amounts from the Year 1 ratios or amount. For each observed change, answer the following questions regarding possible explanations. (Assume that the turnover ratios were calculated using year end balances.) 1. Inventory turnover decreased substantially from the prior year. Which of the following is a possible explanation for this finding? Items shipped FOB shipping point during December, Year 2, were included in Year 3 sales. Items shipped on consignment during the last month of the year were recorded as sales. A significant number of credit memos for returned merchandise that were issued during the last month of the year were not recorded. Year-end purchases of inventory were understated by incorrectly excluding items received before year-end. a. b. C. d. Accounts receivable turnover decreased substantially from the prior year. Which of the following is not a possible explanation for this finding? 2. Items shipped on consignment during the last month of the year were recorded as sales. A significant number of credit memos for returned merchandise that were issued during the last month of the year were not recorded. A larger percentage of sales occurred during the last month of the year, as compared to the prior year Sales increased at a lower percentage than cost of goods sold increased, as compared to the prior year. a. b. c. d