Which of the Following Statements Is CORRECT

question 15

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) If someone deliberately understates costs and thereby causes reported profits to increase,this can cause the stock price 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.
• D) 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.
• E) ​Ethics is not an important consideration in business and in business schools.

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Definitions:

Dividend

A portion of a company's earnings distributed to its shareholders as determined by the company's board of directors.

Operating Activities

The primary revenue-generating activities of a business, such as sales and service delivery, reflected in its cash flow.

Investing Activities

Components of cash flows relating to the acquisition and disposition of long-term assets and other investments not considered cash equivalents.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, such as issuing debt or equity securities.