Which of the Following Is a True Statement Regarding Financial

question 3

Multiple Choice

Which of the following is a true statement regarding financial statement fraud?

• A) Financial statement frauds usually involve the theft of assets.
• B) Financial statement frauds are usually detected by independent auditors.
• C) Financial statement frauds are usually not costly to organizations.
• D) Financial statement frauds are usually committed by the top management of the company.

---

Definitions:

Moral Hazard

Moral hazard occurs when there is a lack of incentive to guard against risk where one is protected from its consequences, often after entering into a contract or agreement.

Deductible

The amount paid out of pocket by the policyholder before an insurance company covers a claim.

Full Replacement Value

An insurance term referring to the amount necessary to replace damaged or lost property with new items of like kind and quality without deducting for depreciation.

Moral Hazard

A situation where one party in a transaction has the opportunity to take risks because they know they will not have to bear all the consequences.