Which of the Following Is a Valid Reason Behind the Prevalence

question 8

Multiple Choice

Which of the following is a valid reason behind the prevalence of revenue-related financial statement fraud?

• A)It is easy to manipulate net income using revenues and receivables accounts.
• B)Till date,none of the revenue-related frauds have been uncovered.
• C)A reversing effect of the fraud automatically occurs only in the subsequent period.
• D)Auditors focus more on balance sheet items than on revenue accounts.

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Definitions:

American Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified asset at a certain price before the option expires.

Asset Price

The value at which an asset is bought or sold on the market.

Exercise Price

The cost at which an option holder has the right to buy or sell the base security.

Risk-Free Interest Rate

The hypothetical yield from an investment assumed to be free of any financial risk, often reflected through government bond yields.