Which of the following factors would affect the authenticity of a firm's receivables?
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A. B. C. D. E.Explanation
Current industry practices will provide clues as to the collectibility of receivables; e.g., a rapidly deteriorating industry could cause a large percentage of receivables to be uncollectible. A firm could extend credit very liberally, in which case the quality of the receivables would be suspect. Additionally, a liberal policy for returns and allowances might cause the value reported on a firm's balance sheet to be overstated.