Multiple Choice
Which element of the Fraud Triangle is most directly increased when a company faces high levels of debt, thereby creating financial risk and instability?
19
views
6. Internal Controls and Reporting Cash
Fraud and the Fraud Triangle
Struggling with Financial Accounting?
Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following does NOT cause inventory shrinkage?
A
Shoplifting by customers
B
Employee theft
C
Obsolete inventory written off
D
Clerical errors
Verified step by step guidance1
Understand the concept of inventory shrinkage: Inventory shrinkage refers to the loss of inventory that occurs due to reasons other than sales, such as theft, damage, or errors.
Analyze the options provided: Shoplifting by customers, employee theft, and clerical errors are all examples of causes that lead to inventory shrinkage.
Consider the option 'Obsolete inventory written off': Obsolete inventory refers to items that are no longer sellable or usable. Writing off obsolete inventory is an accounting adjustment and does not represent a physical loss of inventory, hence it does not cause inventory shrinkage.
Clarify the distinction: Inventory shrinkage involves unintentional losses, while writing off obsolete inventory is a deliberate accounting action to reflect the reduced value of unsellable goods.
Conclude the reasoning: Based on the analysis, 'Obsolete inventory written off' does NOT cause inventory shrinkage, as it is an accounting adjustment rather than a physical loss.
4:54mWatch next
Master Fraud and the Fraud Triangle with a bite sized video explanation from Brian
Start learningRelated Videos
Related Practice
Fraud and the Fraud Triangle practice set
Problem sets built by lead tutorsExpert video explanations