Which of These Is Not Generally Regarded as a Reason

question 35

Multiple Choice

Which of these is not generally regarded as a reason for the recent spate of dubious accounting practices by large companies?

• A) Pressure on managers to meet investors' unrealistic expectations for continually rising profits.
• B) Greed by executives.
• C) Lack of accounting standards.
• D) Too rapid growth financed by borrowing, which leads to a liquidity crisis.

---

Definitions:

Break-Even Level

The point at which total revenues equal total expenses, resulting in neither profit nor loss.

Variable Cost

Costs that vary directly with the level of production or sales volume, such as raw materials and packaging.

CVP Income Statement

An income statement format used in cost-volume-profit analysis, showing sales, variable costs, and the contribution margin.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, indicating how much contributes to covering fixed costs and profit generation.