Final answer:
The statement that cost behavior can be crucial in determining liability and calculating damages in forensic accounting is true. Cost-benefit analysis, as part of understanding cost behavior, plays a vital role in economic assessments relating to crime, such as evaluating the opportunity costs of criminal activity versus legal alternatives.
Step-by-step explanation:
The true statement regarding the role of cost behavior for forensic accounting is: Cost behavior can be used to determine if liability exists and, if it does, the total damages resulting from the liability. In forensic accounting, understanding cost behavior is crucial in evaluating economic damages, establishing liability, and calculating total losses. For example, the cost-benefit analysis can play a significant role in analyzing criminal activities and their economic impacts. This includes considering opportunity costs and how changes in economic conditions can influence the likelihood of engaging in crime.
Cost-benefit analysis is not just about indirect costs; it can help in assessing direct and intangible costs as well. This method is valuable when considering financial crimes like tax evasion, as it evaluates the relative benefits and costs to determine the attractiveness of committing the crime. These analyses involve weighing the potential gains against the risks and penalties associated with illegal activities.
Therefore, forensic accounting goes beyond simple cost estimations and can be instrumental in resolving a variety of legal issues by utilizing detailed financial analyses and understanding of cost behavior.