What Is the Ethical Issue in the Rite Aid Inventory

question 16

Multiple Choice

What is the ethical issue in the Rite Aid Inventory Surplus Fraud case?

• A) The surplus inventory sales and kickback involved collusion between two officers of the company. When Foster wanted to stop the scheme, he was blackmailed in continuing the fraud.
• B) Rite-Aid had a comprehensive corporate governance system that complied with all the requirements of Sarbanes-Oxley.
• C) The internal auditor found and blew the whistle on the surplus inventory sales and kickback cover-up.
• D) Vice Presidents of the company were involved in a material, nine year surplus inventory sales and kickback scheme.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed.

Bonds Payable

Long-term debt securities issued by a corporation or government entity, which must be repaid to investors at a specified maturity date.

Amortized Bond Discount

The gradual reduction of the discount on a bond over its life, moving towards its par value, usually done in equal amounts over the accounting periods.

Straight-Line Method

A method of allocating an asset's cost evenly throughout its useful life.