All of the following are indicators of financial statement fraud EXCEPT:
A)Companies with unrealistically large growth in assets, revenues or profits.
B)Companies with a principal who has been involved in a bankruptcy.
C)Companies whose success depends on a special tax loophole or tax avoidance scheme.
D)Companies that report contingent liabilities that have the potential to create a loss.

Question

Quizplus · Accepted Answer

Reporting contingent liabilities that have the potential to create a loss is not necessarily an indicator of financial statement fraud, as it is required by accounting standards to disclose potential losses. On the other hand, companies with unrealistically large growth in assets, revenues, or profits, companies with a principal who has been involved in a bankruptcy, and companies whose success depends on a special tax loophole or tax avoidance scheme are all potential indicators of financial statement fraud.

All of the Following Are Indicators of Financial Statement Fraud