Detecting Fraud Through Financial Statement Ratios Is Much Easier Than

question 29

Multiple Choice

Detecting fraud through financial statement ratios is much easier than assessing changes in the financial statement numbers themselves because:

• A) They are sensitive to changes in key variables
• B) Benchmarks are known
• C) All of the above
• D) None of the above

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Definitions:

Contractual Interest Rate

The agreed-upon rate of interest that is to be applied to the principal amount in a financial contract.

Discount

A reduction in the price of goods or services, typically offered to encourage purchases.

Face Value

the nominal value or original cost of a security as stated by the issuing authority, not necessarily its market value.

Proceeds

The total amount of money received from a sale or transaction.