When WorldCom Used Intentional Accounting Irregularities to Make the Company

question 228

Multiple Choice

When WorldCom used intentional accounting irregularities to make the company look more profitable than it actually was, it:

• A) provided its stockholders profit through a tax loophole.
• B) acted in an acceptable business manner.
• C) engaged in illegal behavior.
• D) executed its responsibility to its owners.

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Definitions:

Budgeting

Budgeting involves planning income and expenditure for a specific period, helping organizations allocate resources efficiently.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid.

Unit Fixed Costs

Unit fixed costs refer to the costs that do not vary with the level of output or activity within a certain range of production or sales.

Total Variable Cost

The sum of all costs that vary directly with the level of production or sales volume, such as raw materials and direct labor.