By Serving on the Board of Directors of Various Charities,Bernie

question 10

Multiple Choice

By serving on the Board of Directors of various charities,Bernie Madoff was able to:

• A) Utilize their tax-exempt status to his advantage
• B) Invest funds in a nontaxable manner
• C) Hide his profits through the use of nonprofit organizations that were highly unlikely to be audited by the IRS
• D) Gain their trust

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Definitions:

Carrying Value

The book value of an asset as reflected in a company's financial statements, calculated as the original cost minus accumulated depreciation.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Effective Interest Rate

The actual cost of borrowing or the actual return on investment, taking into account the effect of compounding interest as opposed to the nominal rate.

Amortization

The gradual reduction of a debt over a period of time by periodic payments of principal and interest sufficient to repay the loan by maturity.