1. Unethical accounting and financial reporting often involves managers manipulating financial statements for personal gain. How would a manager artificially increase (inflate) reported net income for the current period?

A) overstate (increase) reported revenue and/or decrease reported expenses

B) understate (decrease) reported revenue and/or increase reported expenses

C) increase reported COGS for the period

D) decrease reported sales revenue for the period

2. Regarding the importance of ethical financial reporting, which of the following is true?

A) Publicly-traded companies do not need to be audited periodically. B) There are no potentially significant penalties for managers who commit fraudulent financial reporting C) Publicly-traded companies are required to be audited periodically and there are. potentially significant penalties for managers who commit fraudulent financial reporting D) If caught committing fraudulent financial reporting, managers will, at most, be subject to a small fine. But managers cannot be sent to prison for fraudulent financial reporting and/or securities fraud.