A Tendency for Fraud May Exist When the Granting of Stock

question 33

True/False

A tendency for fraud may exist when the granting of stock options is dependent on reaching an earnings goal.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.

Stockholders' Equity

The residual interest in the assets of a corporation that remains after deducting liabilities, also known as shareholders' equity.

Retained Earnings

The portion of net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Dividends Payable

Dividends payable are a liability on a company's balance sheet representing the amount of dividends that the company has declared but has not yet paid out to its shareholders.