In the Case of Bernard Madoff, a Scheme Was Created

question 97

Multiple Choice

In the case of Bernard Madoff, a scheme was created as an investment program in which the early investors were paid out returns on their investments, not from earnings but from funds supplied by later investors, although they thought the earnings were the results of successful investments. Which of the following describes this scheme?

• A)Ponzi scheme
• B)Pyramid scheme
• C)Price fixing scheme
• D)Conspiracy scheme
• E)Bait-and-switch scheme

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Definitions:

Estimated Gross Profit

An expected amount of profit calculated by subtracting the estimated cost of goods sold from the estimated total sales revenue.

Sales Totaled

This term refers to the aggregate amount of revenue generated from the sale of goods or services over a specific period.

Inventory Cost

The total cost incurred for obtaining, storing, and managing inventory that has not yet been sold.

Retail Method

An inventory valuation method used in retail, estimating inventory costs based on the relationship between the cost and retail price of goods.