Identify which ratio is correctly linked to the information it could reveal about the company's potential for revenue fraud.
A. Gross profit margin--this ratio will increase if management overstates inventory
B. Sales return percentage--a sudden decrease in this ratio can mean that customer discounts are not being recorded in the accounting records
C. Allowance for uncollectible accounts as a percent of receivables--when a company records fictitious receivables, this ratio increases
D. Operating profit margin--a dramatic decrease in this ratio could indicate fraud.
Answer: A