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

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Multiple Choice

Why are supplier audits conducted periodically by the buyer in the context of fraud prevention?

To ensure that the buyer's employees receive higher commissions.

To reduce the buyer's tax liability.

To detect and prevent fraudulent activities such as kickbacks or false billing by suppliers.

To increase the supplier's production capacity.

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Verified step by step guidance

Understand the purpose of supplier audits: Supplier audits are conducted to ensure compliance with agreed-upon terms, quality standards, and ethical practices. They are a key control mechanism in financial accounting and fraud prevention.

Identify the context of fraud prevention: Fraud prevention involves detecting and mitigating risks such as kickbacks (illegal payments to employees for favoring a supplier) or false billing (invoicing for goods or services not provided).

Evaluate the options provided: Analyze each option to determine its relevance to fraud prevention. For example, ensuring higher commissions for employees or reducing tax liability is unrelated to fraud prevention.

Focus on the correct rationale: Supplier audits help uncover irregularities in transactions, such as inflated invoices or unauthorized payments, which are critical for detecting and preventing fraud.

Conclude with the correct answer: The primary reason for conducting supplier audits in the context of fraud prevention is to detect and prevent fraudulent activities such as kickbacks or false billing by suppliers.