Senior Management of Mega Corp

question 13

Multiple Choice

Senior management of Mega Corp. is entitled to receive large bonuses if they achieve earnings targets. What is the effect of this on the risks associated with recording of revenue?

• A) It increases inherent risks associated with revenue cutoff and existence assertions.
• B) It increases inherent risks associated with revenue cutoff and completeness assertions.
• C) It increases control risks associated with revenue cutoff and existence assertions.
• D) It increases control risks associated with revenue cutoff and completeness assertions.

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Definitions:

Selling Car

The process or act of transferring ownership of a vehicle from one person to another in exchange for money or other compensation.

Consumer Leasing Act

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Balloon Payment

A large final payment on a mortgage that has relatively low fixed payments during the life of the mortgage.

Lease Automobile

A contractual agreement where one party (lessee) pays to use a vehicle owned by another party (lessor) for a predetermined time period.