Management is prone to overstate:

A) accounts receivable and inventory.
B) accounts receivable, but not inventory.
C) inventory, but not accounts receivable.
D) neither accounts receivable nor inventory.

Management might overstate accounts receivable and inventory to make the company's financial position appear stronger than it actually is. Overstating accounts receivable suggests the company is owed more by its customers than is actually the case, while overstating inventory suggests the company holds more assets in the form of stock than is accurate. Both practices can mislead investors and other stakeholders about the health of the business.