Which of the Following Statements Is True Regarding Ethical Issues

question 48

Multiple Choice

Which of the following statements is true regarding ethical issues accompanying budgeting?

• A) Conflicts of interest do not arise when employees are asked for input to help establish a budget.
• B) Easy target incentives are eliminated through budgeting.
• C) The conflicts of biased budgeting can be avoided in a decentralized firm.
• D) If budget targets are difficult to meet, employees could turn to fraudulent financial reporting.

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Definitions:

Journal Entry

A record in accounting that documents a financial transaction in the ledger.

Bond Issuance

The process by which a borrower, typically a corporation or government entity, issues bonds to raise funds from investors.

Effective Interest Method

An accounting technique used to allocate the discount or premium on bonds payable or receivable over their life, reflecting the actual interest rate over the period.

Amortization

The process of spreading out a loan or intangible asset cost over its useful life.