Which of the Following Is the Best Description of a 'Pyramid

question 32

Multiple Choice

Which of the following is the best description of a 'pyramid scheme'?

• A) A multi-level marketing scheme that rewards participants for products sold.
• B) A distribution chain involving retailers and their customers.
• C) A scheme based on a representation that a person has agreed to acquire goods or services when that is not the case.
• D) A scheme whereby participants are invited to sell products and to receive a reward or benefit for introducing new participants to the scheme.

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Definitions:

Equity Method

The equity method is an accounting technique used to record investments in associate companies where the investor has significant influence but does not control the company outright, typically identified by owning 20-50% of the voting stock.

Deferred Intra-entity

Pertains to transactions between entities within the same company that are not settled immediately but are recorded and settled at a later date.

Markup Over Cost

The ratio or percentage by which a product’s selling price exceeds its cost, effectively representing the gross profit margin.

Consolidated Cost Of Goods Sold

The total cost of goods that have been sold by a parent company and its subsidiaries, presented as a single figure in consolidated financial statements.