All of the Following Are Ways to Detect Disclosure Fraud

question 30

Multiple Choice

All of the following are ways to detect disclosure fraud except:

• A) A tip or a complaint
• B) Making inquiries of management regarding related-party transactions, and other liabilities
• C) Identifying inconsistencies between disclosures and information in the financials
• D) Searching for analytical symptoms in the financial statements

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Definitions:

Capital Intensity Ratio

A financial metric that measures the amount of capital needed per dollar of revenue; used to evaluate the investment intensity of a business's operations.

Fixed Asset Turnover Ratio

A financial metric that measures how efficiently a company uses its fixed assets to generate sales, calculated by dividing net sales by average fixed assets.

Capital Intensity Ratio

This ratio measures a company's investment in physical assets relative to its labor costs, indicating how much capital is used in the production process.

External Financing Needed

The amount of funding that a company must seek from external sources to finance its planned activities or investments, beyond what it can generate internally.