All of the Following Are Indicators of Financial Statement Fraud

question 14

Multiple Choice

All of the following are indicators of financial statement fraud EXCEPT:

• A) companies with unrealistically large growth in assets, revenues or profits.
• B) companies with a principal who has been involved in a bankruptcy.
• C) companies whose success depends on a special tax loophole or tax avoidance scheme.
• D) companies that report contingent liabilities that have the potential to create a loss.

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Definitions:

ESOP

Employee Stock Ownership Plan, a program that provides company stock to employees as part of their compensation.

Gain-Sharing Plan

A compensation strategy where employees receive bonuses based on the company's profits or improvements in performance, fostering a sense of ownership and teamwork.

Lump-Sum Increase

A one-time payment given to employees, typically in lieu of recurring pay raises, often based on performance.

Skill-Based Pay

A compensation strategy where employees are paid based on the number, depth, or complexity of skills and knowledge they can bring to their work, rather than their job title or position.