Which of the Following Statements Is True

question 2

Multiple Choice

Which of the following statements is true?

• A) Most financial statement frauds occur in large, historically profitable companies.
• B) Most people who commit management fraud are first-time offenders.
• C) An active board of directors or audit committee does little to deter fraud.
• D) Perpetrating fraud is much easier in an organization with democratic leadership, where the decision making is spread among several individuals.

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Definitions:

Full Capacity

The maximum level of output that a company can sustain to make a product or provide a service under normal circumstances.

Operating Capacity

The total output a company can produce using its current resources, under normal working conditions.

Sales

The total amount of a company's revenues generated from the sale of goods or services.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment in its core business or to pay debt.