Which of the Following Would Be Considered Financial Statement Fraud

question 57

Multiple Choice

Which of the following would be considered financial statement fraud (knowingly making material misrepresentations of fact with the intent of making someone believe the falsehood and suffer a loss as a result of acting upon that falsehood) ?

• A)Increasing the returns allowance as a result of unusually high sales near year end.
• B)Transferring non-performing assets at historical values to a non-consolidated subsidiary.
• C)Employee theft from petty cash.
• D)Purchasing several months' supply of office supplies in order to qualify for a large volume discount.

---

Definitions:

Damages

Financial compensation awarded by a court to indemnify loss or harm suffered as a result of another party's actions or negligence.

Standing

The legal right to initiate a lawsuit, predicated on the party's stake in the outcome of a dispute to be adjudicated by the court.

In Personam Jurisdiction

A judicial jurisdiction over the person, where the court has the authority to make decisions affecting the personal rights of an individual.

Long-Arm Statute

A statute that enables a court to obtain jurisdiction against an out-of-state defendant as long as the defendant has sufficient minimum contacts within the state, such as committing a tort or doing business in the state.