Determine from the Following the Factor That Would Most Likely

question 42

Multiple Choice

Determine from the following the factor that would most likely elevate the auditor's concern about the risk of financial statement fraud.

• A) company cannot borrow debt capital without restrictive covenants
• B) company finds it difficult to sell equity capital for expansion
• C) company has a significant portion of liquid assets on its balance sheet
• D) company reports substantial net income but ever decreasing cash flow from operations

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Definitions:

Wage Differences

Variations in pay for jobs that are based on factors like location, skill level, experience, and industry demand.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.

Surplus Of Labor

A situation where the supply of workers exceeds the demand for labor, often leading to unemployment or underemployment.

Minimum Wage

The lowest legally permissible wage that employers can pay their workers, established by government laws.