Which of the Following Best Represents Financial Statement Fraud

question 27

Multiple Choice

Which of the following best represents financial statement fraud?

• A)The transfer agent issues 40,000 shares of the company's stock to a friend without authorization by the board of directors.
• B)The controller of the company decreases a contingent liability by $3 million because the company will otherwise miss analysts' expectations this quarter.
• C)The in-house attorney receives payments from the French government for negotiating the development of a new plant in Paris.
• D)The accounts receivable clerk covers up the theft of cash receipts by writing off older receivables without authorization.

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Definitions:

Market Failures

Situations where markets do not allocate resources efficiently on their own, leading to a loss of economic welfare.

Government Role

The activities undertaken by a government to regulate and administer economic, social, and political affairs.

Market System

An economic system in which decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Allocation of Resources

The distribution of scarce resources among various uses or people within an economy.