Question

Companies that commit financial statement fraud are often experiencing net losses or have profits that are less than expected by outside stakeholders (e.g., investors).

Option 1: True
Option 2: False

Answer 1

The statement 'Companies that commit financial statement fraud are often experiencing net losses or have profits that are less than expected by outside stakeholders' is True.

Step-by-step explanation:

The statement 'Companies that commit financial statement fraud are often experiencing net losses or have profits that are less than expected by outside stakeholders (e.g., investors).' is True.

Financial statement fraud refers to intentional misrepresentation or manipulation of financial statements by a company. Companies that resort to such fraudulent practices often do so to hide their poor financial performance or to make their financial position appear better than it actually is. This deceitful behavior is more commonly observed when companies are facing net losses or have lower-than-expected profits, as they may try to attract investors or maintain their credibility in the market.