Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

What is the primary reason that many new businesses fail early on, according to the Fraud Triangle framework?

High employee turnover

Overinvestment in marketing

Lack of sufficient internal controls, increasing the opportunity for fraud

Excessive government regulation

Previous problemNext problem

Verified step by step guidance

Understand the Fraud Triangle framework, which consists of three elements: Opportunity, Pressure, and Rationalization. These elements explain why individuals commit fraud.

Focus on the 'Opportunity' element of the Fraud Triangle. Opportunity arises when there are weaknesses in internal controls, allowing individuals to exploit the system.

Recognize that new businesses often lack sufficient internal controls due to limited resources, lack of experience, or inadequate systems, which increases the opportunity for fraud.

Compare the given options to identify which one aligns with the 'Opportunity' element of the Fraud Triangle. The correct answer is 'Lack of sufficient internal controls, increasing the opportunity for fraud.'

Conclude that the primary reason many new businesses fail early on, according to the Fraud Triangle framework, is the lack of sufficient internal controls, which creates an environment conducive to fraud.