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NEW QUESTION: 1
A pharmaceutical company was recently awarded a 20 year patent for a new medicine it has developed. Which of the following results could be a consequence of this patent? (Select all that apply.)
A. The pharmaceutical company will charge higher prices for the drug.
B. Pharmaceutical companies will be incentivized to develop new medicines in the future.
C. The cost to produce the medicine will remain high after the patent expires.
D. The company will drive its competitors out of the pharmaceutical industry, limiting innovation.
E. The high price of the medicine will result in insufficient demand.
Answer: A,B

NEW QUESTION: 2
An audit of customer accounts receivable found that outstanding receivables as a percentage of revenue had increased significantly during the past two years. The increase was attributed to the extension of credit, at the urging of the marketing department, to a number of companies that were not creditworthy. Which of the following would be least useful in monitoring the disposition of this finding?
A. Periodic updates from the controller regarding the status of corrective actions.
B. Responses from the manager of accounts receivable regarding collection of outstanding receivables.
C. Information from the credit and marketing personnel assigned the responsibility for reevaluating credit policies.
D. Updates from the information technology division regarding implementation of a new accounts receivable system.
Answer: D

NEW QUESTION: 3
When auditing prepaid insurance, an auditor discovers that the original insurance policy on plant
equipment is not available for inspection. The policy's absence most likely indicates the possibility of a
(an):
A. Deficiency in the coinsurance provision.
B. Understatement of insurance expense.
C. Insurance premium due but not recorded.
D. Lien on the plant equipment.
Answer: D
Explanation:
Explanation/Reference:
Explanation:
Choice "C" is correct. If an auditor discovers that the original insurance policy on plant equipment is not
available for inspection, this most likely indicates that there is a lien on the plant equipment, since the
original policy would likely be in the possession of the lien holder.
Choices "A", "B", and "D" are incorrect. The absence of the original policy does not necessarily indicate
that there is an insurance premium due but not recorded, that there is a deficiency in the coinsurance
provision, or that insurance expense is understated, since the policy must be reviewed before any of these
conclusions can be drawn.

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