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

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.