When Management Fraud Occurs, Companies Usually

question 11

Multiple Choice

When management fraud occurs, companies usually:

• A) overstate assets and net income.
• B) understate assets and net income.
• C) overstate assets and understate net income.
• D) understate assets and overstate net income.

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Definitions:

Internal Control

Approaches and techniques employed by a business to protect the veracity of accounting and financial information, foster answerability, and inhibit dishonesty.

Cash Receipts

Money received by a business from transactions, including sales, loan proceeds, or other cash inflows.

Control Measures

Actions, mechanisms or policies implemented to regulate processes and diminish risks.

Sarbanes-Oxley Act

A United States federal law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.