When might a fraud scheme be used to understate revenue and net income?
A) In order to manage or smooth income
B) To allow a company to pay lower income taxes
C) To improve key financial statement ratios
D) Two of the above
E) All of the above

Question

Quizplus · Accepted Answer

A: Incorrect; B is also correct
B: Incorrect; A is also correct
C: Incorrect; understating net income would not improve any key ratios
D: Correct; A and B are both correct
E: Incorrect

When Might a Fraud Scheme Be Used to Understate Revenue