The Study Done by the Committee of Sponsoring Organizations (COSO)

question 23

Multiple Choice

The study done by the Committee of Sponsoring Organizations (COSO) on financial statement frauds that occurred during the period from 1987-1997 had many key findings. Which of the following is NOT among them?

• A) Frauds were most commonly perpetrated by improper revenue recognition, overstatement of assets, and understatement of expenses.
• B) Most of these firms had audit committees that met at least four times a year.
• C) Severe consequences were associated with companies who committed financial statement fraud.
• D) Most companies were experiencing net losses or were just holding break-even positions in periods prior to the fraud.

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Definitions:

Decreasing-cost Industry

An industry in which the costs of production per unit decrease as the industry grows and output increases.

Long-run Equilibrium

A state in which all factors of production and outputs are adjusted so that prices, supply, and demand are stable over time.

Law of Demand

The principle that, all else being equal, as the price of a good or service decreases, the quantity demanded increases, and vice versa.

LCD Televisions

A type of television that utilizes Liquid Crystal Display technology to project images, known for their slim profiles and energy efficiency.