Which of the Following Statements Is CORRECT

question 43

Multiple Choice

Which of the following statements is CORRECT?

• A) If a lower level person in a firm does something illegal, like "cooking the books" to understate costs and thereby artificially increase profits because he or she was ordered to do so by a superior, the lower level person cannot be prosecuted but the superior can be prosecuted.
• B) There are many types of unethical business behavior. One example is where executives provide information that they know is incorrect to outsiders. It is illegal to provide such information to federally regulated banks, but it is not illegal to provide it to stockholders because they are the owners of the firm.
• C) The bankruptcy of Enron Corporation, and the fraud committed by some of its officers, was the focus of news stories, but it did not lead to any important changes in business practices.
• D) If someone deliberately understates costs and thereby causes reported profits to increase, this can cause the price of the stock to rise above its intrinsic value. The stock will probably fall in the future. Both those who participated in the fraud and the firm itself can be prosecuted.
• E) Ethical behavior is not influenced by training and auditing procedures. People are either ethical or they are not, and this is what determines ethical behavior in business.

Understand the classification and recognition of liabilities on the balance sheet.

Acknowledge the importance of internal controls in managing cash payments and payroll.

Learn the reporting requirements and documentation for payroll and payroll taxes.

Understand the concept and implications of federal unemployment compensation tax.

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Definitions:

General Strike

A large-scale strike action that involves workers from most or all industries in a region or country, typically aimed at achieving major economic or political objectives.

Petrograd

The name given to the city of Saint Petersburg, Russia, between 1914 and 1924, during a period of fervent patriotism and subsequent revolution.

New Economic Policy

A policy introduced by Lenin in the Soviet Union in 1921 to revitalize the economy by allowing some private enterprise.

Socialist Orthodoxy

Refers to the strict adherence to the original doctrines of socialism, often associated with Marxist-Leninist principles and practices.