Which of the Following Is NOT True About an Earnings-Based

question 86

Multiple Choice

Which of the following is NOT true about an earnings-based bonus plan?

• A) Managers are encouraged to work harder and smarter to improve the performance of the company with an earnings-based bonus plan.
• B) An earnings-based bonus plan is most often restricted to top management.
• C) An earnings-based bonus plan gives managers incentive to manipulate reported earnings.
• D) Auditors do not consider a company with an earnings-based bonus plan to be at a higher risk of financial statement fraud.

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