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

Which of the following is a pitfall of using credit cards?

Requirement to pay the full balance every month

Automatic forgiveness of fraudulent charges

Immediate reduction in personal credit score

Increased risk of accumulating high-interest debt

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Verified step by step guidance

Understand the concept of credit cards: Credit cards allow users to borrow money up to a certain limit to make purchases, with the expectation that the borrowed amount will be repaid either in full or in installments. Interest is charged on unpaid balances.

Analyze the options provided: Evaluate each option to determine whether it accurately describes a pitfall of using credit cards. A pitfall refers to a potential problem or disadvantage.

Option 1: 'Requirement to pay the full balance every month' - This is not a pitfall because credit cards typically allow users to pay a minimum amount rather than the full balance, though interest accrues on the remaining balance.

Option 2: 'Automatic forgiveness of fraudulent charges' - This is not a pitfall; in fact, most credit card companies offer protection against fraudulent charges, making this a benefit rather than a disadvantage.

Option 4: 'Increased risk of accumulating high-interest debt' - This is a pitfall because unpaid balances on credit cards often accrue high interest rates, leading to a risk of accumulating significant debt over time if payments are not managed responsibly.