medium10 pts · first answer countsanalytical-procedures

Gross margin jumps unexpectedly

A trading company’s gross margin rose from 25% last year to 32% this year. Prices, product mix and suppliers did not change. What risk does this suggest?

A.Understated closing inventoryB.Overstated closing inventory or unrecorded purchasesC.Overstated purchasesD.No risk, because a higher margin is good

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Gross margin jumps unexpectedly

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