John Is a Management Accountant at DAP Inc

question 61

Multiple Choice

John is a management accountant at DAP Inc.John has reason to believe that his immediate supervisor (the controller) ,the chief financial officer and the company president are engaged in accounting fraud that involves overstating assets and understating liabilities.The company does not have a code of ethics or a set of policies for ethical problems.According to the guidelines offered by the IMA,what should John do?

• A) Report the suspected wrongdoings to the local police.
• B) Discuss the suspected wrongdoings with his immediate supervisor.
• C) Discuss the suspected wrongdoings with the company president.
• D) Report the suspected wrongdoings to the audit committee or the board of directors.

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Definitions:

Initial Investment

Initial investment refers to the amount of money initially laid out for an investment project or venture.

Profitability Index

The present value of a project’s cash inflows divided by the investment required.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Internal Rate

Often refers to the internal rate of return (IRR), which is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.