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Which of the Following Is NOT True About an Earnings-Based

Question 20

Multiple Choice

Which of the following is NOT true about an earnings-based bonus plan?


A) Managers are encouraged to work harder and smarter to improve the performance of the company with an earnings-based bonus plan.
B) An earnings-based bonus plan is most often restricted to top management.
C) An earnings-based bonus plan gives managers incentive to manipulate reported earnings.
D) Auditors do not consider a company with an earnings-based bonus plan to be at a higher risk of financial statement fraud.

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