Which of the Following Statements Is False

question 25

Multiple Choice

Which of the following statements is false?

• A) The Cadbury Commission stiffened the criminal penalties for providing false information to shareholders.
• B) The Exchange Acts of 1933 and 1934, among other things, established the Securities and Exchange Commission (SEC) and prohibited trading on private information gained as an insider of a firm.
• C) Many of the problems at Enron, WorldCom, and elsewhere were kept hidden from boards and shareholders until it was too late. In the wake of these scandals, many people felt that the accounting statements of these companies, while often remaining true to the letter of GAAP, did not present an accurate picture of the financial health of a company.
• D) While one study found that those firms that separated the position of CEO and chairman performed better, another found no relation between the independence of key board committees and firm performance in the post-Cadbury era.

---

Definitions:

Variable Costing

An accounting methodology that only includes variable production costs (costs that change with the level of output) in product costs.

Absorption Costing

An accounting method that includes all of the costs associated with manufacturing a product in the cost of that product.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profitability from its operations.

Variable Costing

An accounting method that assigns only variable production costs to products, treating fixed costs as period costs.