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:

Type II Error

A statistical error that occurs when a false null hypothesis is not rejected, also known as a "false negative" finding.

Null Hypothesis

The null hypothesis is a statement in hypothesis testing that there is no effect or no difference, and it serves as a default position until evidence suggests otherwise.

Alternative Hypothesis

A hypothesis that proposes there is a statistically significant difference between two variables, contrasting with the null hypothesis.

Average Amount

The sum of numerical values divided by the count of values, providing a central or typical value for a dataset.